Model 3 not compelling without Federal Tax Credit... why?

SoFlaModel3

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#1
As a follow up to the poll (POLL: Will not getting the Federal Tax Credit change your plans) that @MelindaV started and mostly motivated by the chatter on Facebook, Twitter, and Reddit; I thought I would start a discussion on this topic some more.

I think we’ve beaten a dead horse in proving that without the credit the Model 3 is very competitive with BMW 3, Audi A4, Mercedes C, Lexus IS, etc. Now take that a step further and once you factor fuel and maintenance savings going the other direction becomes an odd choice. How is it then that there is still chatter that the car isn’t competitive? The only thing that I can think of is that the federal tax credit helped make the car compelling because the consumer wasn’t in the market for a car at this price range otherwise. There seems to be a large faction that believes “car for the masses” and “affordable” is something other than what it came out to be which of course is unfair because affordability is defined at the individual consumer level and I would argue 500,000 pre-orders syncs up with “the masses”. Beside could you imagine an even more affordable car and the production hell they’d be faced with?

If that’s the case that’s the truly sad part about the potential for the credit going away. If the intent of the credit is to drive people toward sustainable transport and there are no compelling options in their price range without the credit, then we see another ICE vehicle sold.

What I’m most curious about for those that will take a pass... is anyone going to buy a car for the same money instead (say BMW 3 series) and then if so why?
 

TrevP

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#2
I think part of the problem here is that a lot of people see the tax credit as a discount on the car where they wouldn't get one otherwise on account of how Tesla has a strict pricing policy. No tax credit: I'm not getting as good as deal as the guy who bought his before me.

We've grown so accustomed to buying cars through a haggling process that not getting a discount feels like being cheated and paying more than we ought to.

Apple sells computers just like Tesla: no discounts (99% of the time) and while you may complain about the higher cost of entry the value of the product far exceeds what you initially paid. Zig Ziglar said it best: "Price is forgotten long after quality is remembered".
 

garsh

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#3
The only thing that I can think of is that the federal tax credit helped make the car compelling because the consumer wasn’t in the market for a car at this price range otherwise.
Bingo.

I buy Hondas, Chevys, Dodges, Nissans, etc. I've never bought a BMW or Audi, and I never had plans to do so.
 

Jakesthree

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#5
I agree with garsh. The Ontario EV rebate is the only way I can consider the Tesla and even then it would be, by far, the most expensive car I've ever bought. That's because the car is very compelling not because it's "affordable".
 

Dr. J

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#6
a lot of people see the tax credit as a discount on the car where they wouldn't get one otherwise
Another way to look at it, from an economist's POV, is that sudden repeal of the tax credit is identical (in its effect) to a sudden tax increase. On a ~$50,000 purchase, that's an added 15% tax. (Or more accurately, a 17.64% increase on a $42,500 purchase.) When something is newly taxed, it deters those prospective purchasers at the margin (on the bubble, in the vernacular). It also may lead some to search for substitutes, whatever prospective purchasers consider those to be. So naturally, some people won't buy without the planned tax credit, and some will seek alternatives.

I'm not in either group because I don't see any substitutes for the Model 3, not even a Model S, and I'm not deterred by the added cost. That's just my taste in things; YMMV. If the credit is in fact repealed, it will be interesting to see what happens to the (US-only) backlog of Model 3 reservations. Maybe 20%-30% go away?
 

MelindaV

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#7
As I said in a couple posts before, I likely would be using any EV tax credit to go toward house projects a year after I get the car. Obviously the money all comes from the same bucket (my checking account bucket, that is) but very likely would not put that tax return money toward any outstanding car loan. If I were not to get that credit, it would not be hurting Tesla sales numbers, but some local to me home improvement store's sales.

ETA: which the EV tax credit was
part of the Recovery and Reinvestment act of 2009 stimulus, so it seems my plan is totally following in the intent of that piece of legislation!
 

eye.surgeon

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#8
Depending on what you pay for electricity, the savings on fuel aren't that significant because gas is cheap and are mostly negated by the cost of servicing, if the Model S is any indicator, service is going to be substantially higher than the German competition at least for the first three years ($600/year vs free). Even if they half the service charge it's still more expensive.
 

MelindaV

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#9
Depending on what you pay for electricity, the savings on fuel aren't that significant because gas is cheap and are mostly negated by the cost of servicing, if the Model S is any indicator, service is going to be substantially higher than the German competition at least for the first three years ($600/year vs free). Even if they half the service charge it's still more expensive.
not sure where in California you are that doesn't have high priced fuel (or what we think of now has high priced as shifted), but around Portland, both on the Oregon side and Washington side of the border, I am paying around $3.25-$3.50/gal while my home electricity price (24/7) is 8¢... so my future Model 3 should cost 16% of my current fuel costs (per my calcs that are on the conservative side of kw/m)
 

SoFlaModel3

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#10
Depending on what you pay for electricity, the savings on fuel aren't that significant because gas is cheap and are mostly negated by the cost of servicing, if the Model S is any indicator, service is going to be substantially higher than the German competition at least for the first three years ($600/year vs free). Even if they half the service charge it's still more expensive.
With my mileage and the current cost of fuel I should save ~$120/month. ($150 for gas vs. $30 for electricity).
 

Over

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#11
After getting all excited about Tesla for their instant torque, environmental friendliness, safety, clean design and future software updates, it's now hard to imagine buying an ICE car. But just from the value perspective, without the Federal Tax Credit, I see many ICE cars with better value proposition even when considering maintenance, fuel etc. For example, 2019 Infiniti QX50? It looks great, interior seems luxurious, and comes with a new variable compression turbo engine which gives 27 miles/gallon combined. If they price it similarly to the current QX50, then it will cost $36,000 before haggling. The base model comes with leather seats, choice of multiple colors, good-looking wheels and other goodies and don't really need any upgrades. Tesla Model 3 base model costs 42,000 with only premium upgrade (mainly for nicer interior) and choice of color.
 

eye.surgeon

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#12
not sure where in California you are that doesn't have high priced fuel (or what we think of now has high priced as shifted), but around Portland, both on the Oregon side and Washington side of the border, I am paying around $3.25-$3.50/gal while my home electricity price (24/7) is 8¢... so my future Model 3 should cost 16% of my current fuel costs (per my calcs that are on the conservative side of kw/m)
California is gifted with both very high gasoline costs and electricity costs so I doubt if the gas/electicity cost ratio is any better here than elsewhere. The lowest price I pay per kwh is 50% more than you., the highest is many multiples higher.
 
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mtdoak

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#13
I think there a lot of people who would usually buy used who were lured to the Model 3 because of the tech and the federal rebate.

As people draw closer to actually paying for the car, the idea of a 40k+ car probably is causing a few people to stretch their budgets. You drop the rebate (even the phase out that a lot of people were hoping to get) I think that will take away a few reservationists. If its gone, you will certainly see people who would have gotten 1st available who will opt for standard range or AWD
 

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#14
California is gifted with both very high gasoline costs and electricity costs so I doubt if the gas/electicity cost ratio is any better here than elsewhere. The lowest price I pay per kwh is 50% more than you., the highest is many multiples higher.
Your statement about California gas vs electricity costs is correct but many California utilities give EV incentives and special rates for charging overnight. With the impending doom of the federal EV tax rebate, I want to refer you back to my previous thread about finding state and local incentives. https://teslaownersonline.com/posts/38088/
 

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#15
As I said in a couple posts before, I likely would be using any EV tax credit to go toward house projects a year after I get the car. Obviously the money all comes from the same bucket (my checking account bucket, that is) but very likely would not put that tax return money toward any outstanding car loan. If I were not to get that credit, it would not be hurting Tesla sales numbers, but some local to me home improvement store's sales.
Agree! I’m sliding the new carpeting/window coverings 2 years. And people think a CAR is a cash sinkhole.........;)
 

AirxSails

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#16
I had not planned on getting anything from the government nor the state as for rebates/incentives. That never figured into my calculus.
I drove a Model S and decided that an electric Tesla was far superior to my Prius. I then saw that I could refill the car without going to the gas station unless I were traveling with it. This is what drives my desire to get one. Quiet, no pollution, sustainable transport.

Even with the Prius which I refill weekly at ~$2.50 gallon here in Katy Texas and the electricity is ~$.09 Kwh so electric is still cheaper. The 60,000 mile/90,000 mile checks on the ICE engine cost me at $500.00 each and the oil change $60-$80 each, the electric Model 3 will still be cheaper to own and be in the shop less than this Prius has. There wont be problems with radiators that need to be flushed for $150.00 or with the emissions system that could cost as much as $1700.00 and head gaskets that gives up on the road trip vacation that cost $2500.00.

This is another nail in oil and gas coffin that as I look back has been ripping me off at every turn since the 70's with embargo's and speculation that raise prices at the pump.
 

Watts4me

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#17
I recently took a test drive on a model S. That solidified me wanting an EV,mainly a Tesla. If more people who are interested in a Tesla would take a test drive,I think that would help them stick with their reservation. They will find that the value is there over an ICE car at the same price level.
 

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#18
After getting all excited about Tesla for their instant torque, environmental friendliness, safety, clean design and future software updates, it's now hard to imagine buying an ICE car. But just from the value perspective, without the Federal Tax Credit, I see many ICE cars with better value proposition even when considering maintenance, fuel etc. For example, 2019 Infiniti QX50? It looks great, interior seems luxurious, and comes with a new variable compression turbo engine which gives 27 miles/gallon combined. If they price it similarly to the current QX50, then it will cost $36,000 before haggling. The base model comes with leather seats, choice of multiple colors, good-looking wheels and other goodies and don't really need any upgrades. Tesla Model 3 base model costs 42,000 with only premium upgrade (mainly for nicer interior) and choice of color.
I'm not anti-Infiniti(I own a 2008 G35x and have been happy with it.) but I'm not sure this is the right car to compare with the model 3. Its 0-60 is 6.3s with the AWD version and its got a CVT. Its also an SUV. I think its fair to say that the Model 3 is competitive with the cars in its class (A4,3-series, Q50, etc) without the credit. But if you want a Tesla and are stretching your budget to get there, its a valid point that its got to be worth it for you and people will be comparing with cars outside that class. Tesla doesn't have a lot of models.
 

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#19
I might take a pass if the credit is gone and go lease an ICE car for a few years while waiting for self-driving and battery tech to improve.

For me, the one thing that really bothers me about model 3 is that leather seats and power adjusting seats aren't included standard for 35k. I could buy many other cars below this price range and that would be standard equipment on most if not all of them. Those are really the only parts of the PUP that I want, but because of the way Tesla packaged it I'm forced to get the rest and then I'm paying 40k just to get something I think should be standard at 35k. With the tax credit I can get standard battery with PUP for 32.5k and that seems reasonable, but without it... no longer worth it to me.
 

SoFlaModel3

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#20
I might take a pass if the credit is gone and go lease an ICE car for a few years while waiting for self-driving and battery tech to improve.

For me, the one thing that really bothers me about model 3 is that leather seats and power adjusting seats aren't included standard for 35k. I could buy many other cars below this price range and that would be standard equipment on most if not all of them. Those are really the only parts of the PUP that I want, but because of the way Tesla packaged it I'm forced to get the rest and then I'm paying 40k just to get something I think should be standard at 35k. With the tax credit I can get standard battery with PUP for 32.5k and that seems reasonable, but without it... no longer worth it to me.
To be fair -- looking in class at the comparable cars...

BMW 320i starts at $34,900 and with leather bumps you to $38,600.
Audi A4 starts at $36,000 and includes leather
Mercedes C300 at $40,250 and includes leather (I think)

Of course if you dive deeper they're all over the place -- rim sizes vary, roof, sound, navigation, etc.

The rub you would have is that you just want a few pieces of PUP and currently you have to buy the whole package. Who knows we may see that down the road after production hell ends.