The $35K Tesla Model 3 Is Back on the Menu, but Not Everybody Can Get One

Tesla Model 3 24 photos
Photo: Tesla
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In the context of new car prices averaging above $47,000, the $35,000 Tesla Model 3 is a big deal. The problem is that not every American can get their hands on one. Yes, there’s a little catch. Here’s what you need to know.
Four years ago, Tesla was finally giving Americans the much-anticipated $35,000 Model 3. It did so only after deciding to close most of its physical stores. In 2019, the vehicle had a range of 220 mi (354 km) and a zero to 60 mph acceleration time of 5.6 seconds. Today, the EPA-estimated range is 272 mi (438 km), and the naught to 60 mph (0-97 kph) time added 0.2 seconds.

Unfortunately, just one year later, the $35,000 Tesla Model 3 Standard Range disappeared. Some rumors were circulating at the time that nobody bought one at this price, but the EV manufacturer made everyone shut up after getting rid of it altogether. Should we remind you of the Tesla Model 2, as well? Maybe we shouldn’t. We'll see if it pops up on Tesla's Investor Day.

However, if you are looking for a new vehicle right now, a Tesla might make sense for you. The company’s current pricing strategy and delivery times for the Model 3 are incredibly attractive, so new car buyers might even consider switching from a fossil fuel-powered vehicle to an all-electric one.

In 2023, the cheapest Model 3 is the Rear-Wheel Drive version which has an MSRP (or “purchase price,” as the company says) of $43,490. You may remember that the automaker applied some heavy discounts for Europe and North America in January. That’s when the Model Y Long Range became $13,000 cheaper overnight. The Model 3 Rear-Wheel Drive got only a $3,000 reduction. Keep in mind that this happened as we were learning that the average price of a new vehicle rose by more than 40% in just three years.

After the demand for the crossover exploded, Tesla decided to adjust its pricing policy. It made the Model Y variants costlier and the Model 3s $500 cheaper. This was an important decision because, for some Americans, it effectively enabled the acquisition of the famed $35,000 Tesla. After the EV tax credit is completely applied, the 2023 Tesla Model 3 Rear-Wheel Drive ends up costing $35,990. And, per the company’s web platform, you might take delivery this month or in March.

Tesla Model 3
Photo: Tesla
Moreover, some states have various other incentives, rebates, or grants in place that can lower the vehicle's price some more. Make sure to check them out before pulling the trigger.

But two problems need to be considered. One is that the EV tax credit (aka the clean vehicle credit) isn’t feasible for every American. There are different yearly income limits, and the credit can be applied only once per EV. If you owe less than $7,500 in federal taxes, then you won’t be able to take advantage of the entire perk.

Second, the U.S. Treasury is expected to release new guidelines regarding battery sourcing in March. The Inflation Reduction Act (IRA) stipulates that automakers who want their electric vehicles to be eligible for the entire EV tax credit must come with batteries that have at least 40% of their critical minerals sourced from the U.S. or countries with which a free trade agreement has been reached. These critical minerals are lithium, nickel, manganese, and graphite.

At the time of writing, Tesla sources most of its critical minerals from China. The upcoming guidelines might cut in half the total EV tax credit applicable for the automaker’s vehicles because of this. Even the carmaker says that the full "credit amount applies to deliveries now and may change during March 2023, at which point the credit value may be reduced."

So, the $35,000 Model 3 might be short-lived. You’d better hurry up and snag one before the new rules are official. If you take delivery before the guidelines are in place, the whole EV tax credit amount will be applied.
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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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