Tesla Launches Model 3 Highland in North America With an Interesting Price Strategy

With so many hints dropping in the past few days, it was clear that the North American debut of the Tesla Model 3 Highland would not be too far. The latest rumors indicated that Tesla would make an official announcement by the end of this week, but no one expected to start sales of the revamped model this soon. The Model 3 Highland orders are now open in the US and Canada, with deliveries projected to begin by the end of this month.

There are many things to be excited about, making it a worthy upgrade over the previous model. The electric sedan has a fresh design that also improves efficiency thanks to better aerodynamics. This helps extend the maximum EPA range of the AWD model to 341 miles from 333 miles, although the RWD keeps the 272-mile rating. Underneath, the refreshed Model 3 comes with new technologies, including the Hardware 4 Autopilot computer and sensors. As such, all Tesla models sold in North America are now HW4-based.

The Model 3 Highland features a more refined cabin with better materials, ventilated front seats, ambient lighting, and a new steering wheel. The gear and turn signal stalks are gone, while the rear passengers get their own LCD screen and a separate audio channel for movies. Basically, everything the made-in-China Model 3 has, the American model got as well. This, sadly, means no additional camera in the front bumper, as rumored before.

Much like its European peers, the US-spec Model 3 is only available in two variants, single-motor Rear-Wheel Drive and dual-motor All-Wheel Drive. The Performance trim, which was quite popular before, is still under development. While the old Model 3 Performance is no longer available to order, you might still buy one as long as stocks last. Tesla offers a hefty discount of at least $5,000, and the IRA tax credit applies on top of it.

The good news is that the refreshed Model 3 is offered at the same prices as the outgoing model, with a base price of $38,990 for the RWD variant and $45,990 for the Long Range AWD. The bad news is that Model 3 Highland doesn't benefit from the IRA tax credit, which introduces a significant disturbance in Tesla's pricing strategy. This is probably why the refreshed model has the same price despite the upgraded features.

Even so, the Model 3 LR AWD is more expensive than the Model Y Performance when factoring in the tax credit ($44,990), which indicates that it might have a demand problem. Of course, many people are excited about the new features and design, but when pragmatic decisions have to be made, it doesn't make much sense to choose a Model 3 Highland instead of the cheaper Model Y.

A solution might be to opt for leasing instead of buying. In this case, you still get the $7,500 tax credit, but there's another issue that puts people off. Tesla's lease contract doesn't allow you to buy the car at the end of the lease. Instead, the leased car must be returned to Tesla, which is a bummer.