2023 Tesla Model 3 Might Be a $25K EV, but I Wouldn't Buy One Now

After two and half years of inventory shortages that may or may not have been completely justified, the American consumer is once again facing a challenge – to buy or not to buy an EV during these trying times. Sadly, some barriers remain with traditional, somewhat stubborn dealerships. But with Tesla, things are different. And – get this – federal and state governments are helping! But should you and I jump on the occasion? Let's find out together.
Tesla Model 3 28 photos
Photo: Tesla / autoevolution edit
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The economy may be doing just fine (for now, at least), but many Americans are not. There aren't many savings left, the job market is tough, workers demand more from their employers, and inflation is changing consumer habits. Now, the priorities are health, food, personal care, and beverages. Consumer demand for other goods like vehicles will contract.

However, this country's dislike for comprehensive public transport makes buying a car necessary. Thus, looking for a reliable and budget-friendly vehicle is something millions must occasionally do. But what should one choose when the market is punishing buyers that don't have deep pockets or a willingness to splurge? Well, one should focus on alternatives! Thankfully, competition in the auto industry remains somewhat satisfactory, so there are some ways out of this conundrum.

So, if anyone can choose, why not pick a car that doesn't break the bank, is better for the environment long term, doesn't require oil changes, can be charged at home or work, has tons of technology as standard equipment, can be upgraded over the air (even when recalls are announced), and can give the buyer a different perspective on how torque feels like when it is delivered instantly? Buying a Tesla Model 3, an all-electric car that seems to tick all the right boxes, starts to make sense.

Tesla Model 3
Photo: Tesla Inc
Moreover, given the current delivery times and confusing communication coming from dealers of popular brands (that may or may not be very serious about putting EVs first), it is understandable why this thirsty-for-great-quarterly-results and direct selling pioneer may capture even more of the market. Reports coming from customers on multiple online platforms praise just how fast Tesla is moving its Model 3 inventory. Someone living in Los Angeles needed just 24 hours to get behind the wheel of their new all-electric sedan.

Let's look at the numbers

At the time of writing, the cheapest new Tesla Model 3 is the single-motor rear-wheel Drive version. It costs $40,240 if you don't add any options. There's no haggling, no back and forth. That's what a customer pays today to get their new EV. Tesla advertises a price of $32,740, but that's true only if you qualify for the updated EV tax credit.

For a little over "forty bands," customers get a vehicle that has an EPA-estimated range of 272 mi (438 km), can reach a top speed of 140 mph (225 kph), and can accelerate from naught to 60 mph (97 kph) in 5.8 seconds. Those are some ideal numbers for a commuting appliance.

But for just $7,000 more, you can add a motor on the front axle and make those values even better! The all-wheel-drive Model 3 Long Range gets an EPA-estimated range of 333 mi (536 km), has a top speed of 145 mph (233 kph), and goes from a standstill to 60 mph in 4.2 seconds. Still not happy with the acceleration time? Pay $2,000, and you'll lower it to 3.7 seconds. That's "very fast car" territory, which means you'll be able to keep up (if the charging level is above 10%) with the likes of the 2017 Aston Martin DB11, 2017 Alfa Romeo Giulia Quadrifoglio, 2012 Audi R8 V10, or 2013 BMW M5.

Tesla Model 3
Photo: Tesla Inc
Besides that, as a Tesla customer, you get access to the Supercharger network, which is known to function great in most cases, unlike some of its CCS-equipped rivals. That turns traveling long distances with a BEV into a worry-free experience.

So, why not buy one today?

For starters, the Model 3 is expected to have its successor officially introduced soon. Prototypes have been spotted more often, and that leaked picture of "Project Highland" had many people question if they should pull the trigger now or wait for the new car that might introduce more than just a redesigned exterior look. I agree with them because Tesla is known for making "computers on wheels." Since technology can become outdated pretty fast, it's better to own the newest vehicle available.

Imagine you have an iPhone X. Apple recently announced that iOS 17 is its latest operating software version that introduces a lot of new things. But the company also confirmed that the iPhone X, which was launched in 2017, will not benefit from this comprehensive update. It takes just six years for a top-of-the-line phone to be forgotten.

Tesla is doing something similar by putting more capable hardware in its newer cars. That's why you might have heard some people talk about Hardware 3 and Hardware 4. If with phones, it's a matter of having the latest gimmicks... Well, with all-electric, noiseless cars, it's about that too. But add safety into the mix because it becomes an essential component of the ownership experience. As a dad, I wouldn't overlook the potential upgrade.

Tesla Model 3 'Project Highland'
Photo: @WholeMarsBlog via Twitter
Tesla's CEO said Hardware 3 was "200% to 300% safer than a human." Hardware 4 (found on some Model 3s and Model Ys even today) is poised to double those percentages, especially as advanced driver-assistance systems like Autopilot or FSD Beta improve with time. The problem with getting an EV with Hardware 4 right now is that Tesla doesn't let buyers know outright what version of the new internals they get. Some get answers to their questions, and some do not. If you want a Model 3 with Hardware 4, it's a guessing game.

Besides that, exactly like an iPhone, the switch from Hardware 3 to Hardware 4 is nearly impossible. Elon Musk confirmed it would just cost too much. If the outspoken CEO tells us it's not worth it, it surely won't be.

But wait, there's more!

Another reason for not buying a Tesla Model 3 today is the looks. The updated unit may ditch the "fish face" and add the squinting, much slimmer headlights, but what matters most is that people will know which car is newer and which is older. That differentiation will matter, especially when you realize it lets everyone know that inside they'll find the best technology the EV maker currently makes.

There's the North American Charging Standard (NACS) issue. The Supercharger network was until recently regarded as a perk for Tesla customers. But with the Magic Dock implementation that adds an adapter for CCS vehicles, things might start to get crowded at the same charging stations. Moreover, Ford and GM adopting the NACS port won't make Supercharging easier on Tesla customers either.

All the abovementioned reasons not to buy a Model 3 today also impact the resale value. Outdated looks and technology and the existence of a refreshed car are guaranteed to lower the price.
Factoring in mileage and remembering that Tesla won't (behave like OPEC to) limit output artificially only makes the future look grimmer for someone who buys a Model 3 today and wants to resell it in two or three years. With money being as expensive as it is today, every dollar counts!

Tesla Model 3
Photo: Tesla Inc
But there's more! Let's look at the price. Tesla says its cheapest Model 3's price starts from $32,740. It even goes as far as to say that you'll spend $25,940 "after potential savings." Those potential savings are only available for cash buyers and include:
  • the federal tax credit;
  • a similar state incentive (where applicable);
  • estimated six-year gas savings.

The problem is that the federal EV tax credit is not a rebate. If you qualify for it, you can subtract $7,500 from what you owe the federal government when you do your taxes next year. It is not a discount directly applied by Tesla at the point of sale. If you do not (or find a way to) owe the federal government at least $7,500, you won't benefit from this fiscal advantage.

Some states, like Colorado, offer a tax credit of $5,000 (applicable from July 1, 2023, onwards) that can be obtained on top of the federal EV tax credit. Fortunately, this one is refundable, meaning that if the amount of the credit exceeds the tax, the excess credit is returned to the taxpayer.

What's even better about Colorado is that from January 1, 2024, EVs with an MSRP of under $35,000 will benefit from an extra tax credit of $2,500. That can make a vehicle like the upcoming Chevy Equinox very attractive for qualifying buyers since they can erase $15,000 ($7,500 from the federal government + $7,500 from the state) off the price.

Nope, not worth it

Sadly for Chevrolet, dealers are apparently still making buying a Bolt – the cheapest EV available today – feel like customers are trying to get a Porsche allocation for an insanely specced vehicle. You do not want this as a manufacturer, especially when others champion the direct sales model.

Tesla Model 3
Photo: Tesla Inc
But despite all that, this BEV is being discontinued. It will most likely be replaced by the better-looking Equinox EV this autumn. The crossover SUV rides on the Ultium platform, which is GM's way of tackling the EV question. Let's hope that GM will improve the dealership buying experience, especially now that it has announced a partnership with Tesla that grants its customers access to the rival's Supercharger network.

The now Texas-based manufacturer must be able to compete with GM and other legacy automakers after they launch their own affordable models. Somehow, the new Model 3 must end up with an MSRP of under $35,000 if it wants to remain a success story.

But all these calculations are worthless unless you live in the right state and qualify for the updated federal EV tax credit. The only certain thing at the end of the day is that the single-motor 2023 Tesla Model 3 costs $40,240. And I'm not ready to pay so much for a car that may or may not have the latest technology, interior design, and exterior looks.

Fortunately, there's an alternative - buying a used EV, which may soon seem more attractive to prospective customers because the federal government is incentivizing this too.
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About the author: Florin Amariei
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Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one.
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