Tesla Advertises Optimistic Model 3 Prices, But Not Everyone Is Impressed

Tesla Model 3

OCT 24 2018 BY TROY TESLIKE 83

Tesla’s prices seem a bit misleading.

Tesla Model 3 Configurator was revamped on October 19, 2018 to add the new Mid Range version but that wasn’t the only change. Tesla also made a change to how the prices are displayed. Instead of the actual price, it now shows the price after potential savings where you select the trim level. The actual price is still there, but it’s displayed at the bottom of the page.

In a tweet, Elon emphasized the potential savings. While it is an excellent idea to make it clear what incentives and gas savings buyers might get, displaying the lower price more prominently than the actual price drew some criticism. Here are a few comments I’ve selected:

Interestingly, this is not the first time the same issue came up. Here is a quote from 3 years ago which expresses a sad disappointment:

Before this change one could proudly say Tesla Motors’ way of selling directly to the customers was much better than going to your local car hustler and being deceived. Now several of our members are actually ashamed to show the Design studio to people interested in buying a Tesla – as even the lowest, most cheating car hustler in Sweden still states the full price for their cars! (June 9, 2015, Tesla Club Sweden, Open letter to Mr Elon Musk)

My Opinion:

This doesn’t look good for Tesla. It sends the wrong message about what kind of company Tesla is. If the intention is to inform buyers about potential savings, that shouldn’t involve making the actual price less visible and displaying a lower price more prominently. This does not create the best customers experience. Therefore it should be changed. In addition, the total price is not actually $45,000 either because the $1,200 Destination & doc fee is missing and needs to be added. In this example, the total price was $46,200. It’s now $1,000 higher.

Screenshot source: /r/teslamotors/

Source: Teslike.com

Categories: Tesla

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83 Comments on "Tesla Advertises Optimistic Model 3 Prices, But Not Everyone Is Impressed"

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Kdawg

Also the statement “All customers are eligible for the full $7,500 tax credit” is not 100% correct. You have to have paid enough in taxes to get the full $7,500 tax credit.

(⌐■_■) Trollnonymous

I’m pretty sure ~ALL~ customers who can afford a Tesla has already paid enough in taxes to qualify.

BoltEV (was SparkEV)

Not retirees. Their income may be low, but they have assets to buy another asset (ie Tesla purchase).

QCO

The solution for retirees is to convert some of your 401k to roth, just enough to create a $7500 tax liability for the year in which you buy an EV.

Spider-Dan

That only keeps you from wasting the tax credit. When you intentionally generate extra tax liability by converting some of your retirement savings, you don’t actually receive any money back… you just won’t have to pay tax on that money at some point in the future when you withdraw it from your account.

It would be the equivalent of taking the prospective value gained to your house by installing solar panels, and then writing it as a line-item discount on the cost of those same solar panels. That’s… not how it works.

Terawatt

So if you draw on the 401K to pay for the Model 3, you pay $7,500 less tax than if you withdrew the same amount to buy an ICE. Right? I think that’s as real a tax saving as any other.

But I totally agree Tesla should eschew the whole asterix approach – it is dishonest, and in a case like this there is zero chance the buyer is going to miss it anyway, so it is pretty much guaranteed to just annoy every single person placing an order (to varying degrees, admittedly). Very stupid move, but *very* easy to fix if they just see it for what it is.

Spider-Dan
So if you draw on the 401K to pay for the Model 3, you pay $7,500 less tax than if you withdrew the same amount to buy an ICE. Right? No. First of all, we’re talking about converting 401k to Roth, not withdrawing from a 401k to pay for a car; those are VERY different things. Withdrawing from a 401k before age 59 1/2 will generate MASSIVE tax penalties. But even in the case of converting, you still don’t get any real savings in the sense of lowering the cost of the car. Let’s suppose your usual tax liability for the year is $5000, which is exactly what you have your payroll withholdings set up for. In a normal year, you would owe nothing but also get no refund. However, you bought a BEV this year which reverses your $5000 in tax liability, so you are scheduled to get a $5000 refund. But since the tax credit is “up to” $7500, you convert about $10k in 401k to a Roth… which generates another $2500 in tax liability (that you won’t have to pay). So great! Your tax savings is now $7500! But you’re still only getting $5000 back from the… Read more »
QCO

All of your 401k will be taxed eventually, including when you die, so why not create a bit of liability in the year you but an EV.

You don’t actually have to cash out any investment, just do the Roth conversion for a sufficient amount to create the liability shortfall. Easy and definitely tax efficient.

Note this just applies to someone over 59 1/2 with insufficient tax liability to fully use the $7500 credit.

Brian

Not true at all. There are tons of ways for high-income taxpayers to lower their tax burden.

Mark.ca

Are we going to cry for them now?

Lou Grinzo

No, but we’re going to act like adults and recognize that they exist.

See? It’s really that simple.

Mark.ca

You want me to care about high earners losing tax credits? Seriously?

bro1999

Want to bet? I’m pretty sure there is at least *1* Tesla customer out there that did not qualify for the full credit.

Vexar

You can’t carry over the credit from a prior year, can you?

Mark.ca

Not this one. The pv you can for 2 years.

ModernMarvelFan

Not necessarily. If you are retired and got the cash in the bank but with low yearly income, you can afford Tesla but don’t have the income to get the full credit.

(⌐■_■) Trollnonymous

That’s where I think it’s stupid.
Incentives should be for EVERYONE.

Pushmi-Pullyu

No, certainly not all customers. As former IEVs editor-in-chief Jay Cole pointed out, since he’s a Canadian citizen, he doesn’t qualify for any of that.

I’m sure you could also find some American citizens who won’t qualify for the fully $7500 credit either, for one reason or another.

Some Guy

Too many people think they get a check for $7500 from the federal gov’t.

DanC

Technically accurate – you’re eligible if you file a tax return. Your actual deduction is in a range of 0-7500 depending on how much you owe – sleazy yes, misleading yes.

acevolt

Your actual credit, not deduction.

Dwayne

In a few months the problem will go away in regards to the tax rebate … Tesla won’t be eligible!

God/Bacardi

No, the amount is cut in half…

Pushmi-Pullyu

…and then in half again, before it disappears entirely.

Will

👏👏👏👏👏 Good article

William

$46.2K is the final, or total price paid by the buyer.

Come on Elon,

taking a page out of the “bait and switch” LICE Stealership model, will not end well for Tesla, if this “potential savings” malarkey isn’t muted, and put on the back burner post haste.

Taylor Marks

$47.2K. Price was increased by $1K last night.

William

My Bad, your “$47.2K. Price” is wright,
that coming from the $1K bump last night.

EVery so often, I need to change the bait at the end of my hook!😵

Gator Rican

$47.2K + TAX (6% here in FL).

Vexar

This gag is nothing new. When the online configurator first came out, similar cries were raised. I see they have managed to find more optimistic influences to add, however. ROI is not the same as sticker price, and while entirely accurate, it’s not “what do I borrow/save” information.

(⌐■_■) Trollnonymous

They’re going to finance the whole damn “Actual Price” thing anyway.

(⌐■_■) Trollnonymous

Maybe it’s just me but the actual price font IS larger than the other price and the other price has an asterisk *.

Do people not see that?

Taylor Marks

The actual price is hidden until you select a config.

(⌐■_■) Trollnonymous

Doesn’t that make sense………..LMAO
I mean c’mon man, do you want Tesla to just throw out a number if the user doesn’t select a config? What number do you want shown if the user doesn’t select a config?

Mike (evbww)

I am guessing that you are trolling, but I will respond anyway. In the USA, the vast majority of us read left to right and top to bottom. Therefore we see the lower number first. I will not save anything using their gasoline savings estimate as I already have an EV. This is bait and switch garbage and, I believe, is insulting to most people.

(⌐■_■) Trollnonymous

How the heck is it bait and switch if BOTH prices are shown with one more prominent (larger font) than the other?

MikeM

If a practice is misleading, has real impact on a customer and needs rationalization to understand then it’s dishonest, tacky, sleazy you name it!

We expect better of Tesla. Period.

Pushmi-Pullyu

Easy. Just look at the example shown above in the article. If you still don’t get it… then I guess we can’t explain it to you.

I think it’s safe to say that the overwhelming majority of people would agree it’s misleading, even if you refuse to see that.

DJ

Um, no, it’s a straight up one for one tax credit. It’s not a tax deduction. You can get the full $7500. However, it’s a non-refundable credit, so you don’t get the full credit unless you actually paid over $7500 in taxes.

Mike (evbww)

This is not true. It is a tax credit, not an income deduction. As long as you would have paid at least $7500 in Federal taxes, you should get the entire credit. I say should because I was unable to get the full credit for a 2007 Civic Hybrid even though I paid at least that much in taxes that year. I got about 90% of the credit. If you want to be sure, run a test using tax software or consult your accountant. YMMV.

Some Guy

The potential savings are bogus. What assumptions are made? Just give me the MSRP up front instead of obscuring it.

Alex

That’s clearly deceiving. Even more when tax credit is not something that Tesla deal with, it’s something that comes after.
In the end, it’s all about money, the same for others as it is for Tesla.
I remember the “don’t be evil” from Google. When you reach some size, investors are in the middle, profits are mandatory, … there’s no more nice guys.
Consumers should keep their minds sharp always.

Dima

Yes but a respectable company, should not behave like this. Tesla’s behaviour feels more “cheap and scammy”, than what you expect from an established company.

Mark.ca

How many time do we have to say that the fed credit is a DOLLAR FOR DOLLAR credit. Make sure it registers in your head: if throughout the year you pay $7500 or more in fed tax then you get a check for $7500 next year when you do your taxes.
Your second point is as dumb as the first. Is going from electric to gas going to save you anything? Their main target is gas drivers so they had to show them how is done.
Also your savings vary on your situation. In my case, because of my pv the numbers are almost double of that they post…so from my point of view they are undershooting.

Michael S

There should be an option to select your current car. In my case, coming from an existing BEV hatch, my “fuel savings” would be negative and add to the price of the car.

Similarly, there should be an option for state of residence, along with income, so incentives and taxes are estimated more accurately.

Jorttu

Yeah, i agree. I do think TCO is an important part of the equation and not everyone even realizes how much $ they burn on fuel. “Savings calculator” would be neat instead of an example.

(⌐■_■) Trollnonymous

“Similarly, there should be an option for state of residence”

No. that’s for the buyer to take care of as well as the Fed Incentive. They only use the Fed because it’s across the board to all states.

acevolt

This ignorant post needs to be removed. I can’t believe posters on this forum are so clueless as to not know how the tax credit works.

Dima

More problems of Musk’s personality on Tesla.

Pushmi-Pullyu

No, definitely not. This is very much the opposite of what we’ve come to expect from Elon. For example, Elon has been very careful never to include a discount from any tax credit when citing the price of the Model 3. I rather suspect this change was a decision made by someone else.

Well, I’ve been calling for other top execs at Tesla to be given more authority, and the ability to act on that authority independently. Sadly, this seems to be an indication that’s happening. As they say: “Be careful what you wish for!” 🙁

(⌐■_■) Trollnonymous

If you think you’re going to pay the lower price then you’re a fool.
Everyone finances the actual price minus whatever down you throw in.

Isn’t that how it is purchasing any other EV? You pay including all incentives then you get it back later from Fed incentive or State/County/City/Utility rebates?

How does the actual payment price make your purchase any differen’t?

Lou Grinzo

“Everyone”? Uh, no. I know several people who bought new cars in the last few years, including EVs, with zero financing. They might be in the minority, or even a small minority, but they do exist, disproving “everyone”.

(⌐■_■) Trollnonymous

But they paid (for the EV) with the included $7500 price!
Show us the purchase order that shows there was a minus $7500!

At the end of that transaction the buyer DID NOT get a minus $7500,

ModernMarvelFan

This kind of practice is really lame.

But generally EV buyers are smart enough to see thru that. Still, it is a lame marketing tactic.

Magnus H

So, if EV buyers see through, why do you think they do it?

Get Real

Uh, maybe because the product is so good?

I agree that the tweaks to pricing and options is sub-optimal but there is no question that Tesla makes the most compelling EVs in existence with a supporting ecosystem to match.

That Tesla had proven that it is profitable with continuous massive growth helps explain why these tweaks are so fluid at this point.

Simply, the Model 3 is the breakthrough EV the community has been waiting for and it has delivered.

Cypress

It did trick a coworker. He was super excited about the price quoted on the website. I had to point out that was “after savings”.

Lou Grinzo

Tesla needs to be better than this. They are still the new kid on the block, and they have a lot of work to do to convince mainstream consumers to buy an expensive, 100% electric car through an unfamiliar type of store. Adding this kind of snake oil BS into the mix makes Tesla look like the worst of the Legacies, and they can’t afford the image hit.

Huhu

Couldn’t agree more with this article. Too many price changes already annoyed one of my friends so much that he’s seriously considering asking for the deposit refund. Consistency and clarity/openness is what I expect of Elon/Tesla.

James
I had to sacrifice to buy my Model 3. My brother stood in line and put down his $1000 over 2 1/2 years ago. As a family member I was able to transfer thelo deposit and only had to wait 4 months to pick up my beautiful 5 passenger, 2 trunk, AWD racecar (non Performance) that regularly smokes BMW M3s and Porsche 911s on tbe freeway as they challenge me regularly. The big whoop for us this week was our trip to Costco. I went off looking at “guy stuff” while the wife did most of our 2 week shopping for a family of 4. When I caught up to her, the shopping cart looked like Mt. Everest! I mean, 30lb. bag of cat food, a mega-sized pack pf BOTH toilet paper AND paper towels and enough flats of food to feed an army! One box of clothes hangers hung precipitously off the bottom, ready to fall. “NO WAY all that will fit in the Model 3!”, says me, “NO WAY!” We laughed and argued as we debated at checkout which items to leave out. The Costco checkers got into it as they laughed at our “eyes too big for… Read more »
Nate

TLDR

William

Last sentence sums it up perfectly!

Also, the TM3 is tough enough to overstuff!

https://youtu.be/pu0MnhHqQJw

Dave100e

Race car you say?

So you have an FIA log book for your TM3?

You have installed the mandated roll cage, seats, harnesses and fire suppression system?

I’d be interested to hear what regulations you have built the car to. I’m not aware of any series right now that has regulations aimed for EV’s, other than the i-pace trophy and future e TCR series, and the TM3 doesn’t fit either those regulations.

Because if you haven’t done all of the above it’s not a race car.

Cypress

If it was just your u and the wife, you just put the seats down in the Bolt, and it would all fit, I’m sure.

Gator Rican

In my world of finance/banking this would most certainly be a UDAAP violation – Unfair, Deceptive, or Abusive Acts or Practices.

A hefty fine/penalty would be imposed by our regulators.

BEVfan

The first article I read here made by an honest person. Finally pointing out the ways Musk is lying to his customers. Yes, you might get 7500$ in deductions, yes you might save that much from gas and yes, SR Model 3 might cost 35.000$. But you have to fulfil a lot of conditions to get there.
Many customers will see this as a direct attempt of tricking them, will be very disappointed and will back down.
Tesla will finally realize that it is a bad move and come back to normal.

Bill Howland

Yeah, i hear ya, but this doesn’t really bother me as Musk has listed this before with the “S”.

I just wish the information on the web site was as straight-forward as it used to be years ago.

Back then, it was VIA Motors that had partial, confusing, contradictory info on their website.

krona2k

Yeah I have to agree. It’s ok to put both prices, after all ICE prices don’t include the huge amount of additional money that has to be spent on liquid fuel. However the two numbers should be next to each other so it’s clear the lower number is not the price you have to pay.

Dave100e

You can’t guess how much fuel an ICE will use any more than you can guess how much an EV will save in comparison.

Either way it’s deceptive and unnecessary.

wavelet

Sleazy++
(but then so are many of Tesla’s practices, like no detailed specs, so they can play with what you actually get (Alcantara issue), no 3d-party servicing etc.)

Brave Lil' Toaster

“That’s not what I expect from Tesla”.

What? They must be new here. They’ve always been doing this with their pricing on the website.

Pushmi-Pullyu

It certainly is not what they’ve always been doing. What are you talking about?

Mark

The 35,000 model if it ever is made in 4-6 months won’t be 35,000. Tesla should have never promised a 35,000 car and just said 49,000 plus

Cypress

Super deceptive.

John

What’s kinda funny is the folks that b-tch about Tesla constantly changing their pricing and not being straightforward will get a different price quote on the same car at every different legacy ICE car dealership. Just food for thought.

Pushmi-Pullyu

True, but Tesla advertises their “no-haggle” pricing policy. It’s what customers have come to expect: that Tesla doesn’t play games with the price you pay for a car.

But the practice shown in this article makes Tesla look like they’re starting down the path of using the sort of bait-and-switch pricing that all too many sleazy gasmobile dealers use.

Dave100e

That’s because different dealerships have different costs and overheads based on a lot of different variables. A dealership in a busy city center built on highly sought after land is always going to be more expensive than one located in a remote commercial estate. It’s a pretty basic, low level consideration for all businesses, not just automotive and generally doesn’t constitute trickery or deception. Although I’m not going to pretend that stealerships wont adjust prices according to local demand.

Jonathan B

Their pricing is so disingenuous. For example in CA, the cheapest Model 3 you can buy is $46,000 + $1200 delivery + about $800 DMV + 9% tax ($4,140) = $52,140. Now if you assume you can get the car by the end of 2018 and you earn enough for the federal credit (-$7500) and if you can get a state rebate and don’t make too much for that one, (-$2500), but you have to claim the $2500 as income so there’s tax on that… (+ about $500) and if you get a PG&E rebate (-$500) then after all of that, the actual cost to own the car is $42,150. This doesn’t include gas savings, but if you’re already driving an EV (like me) that’s irrelevant as well.

JakeY

I remember they did this for the S too and it was not well received and they removed it. It seems they forgot that experience.

Pushmi-Pullyu

I am very disappointed to see this change. Before this, we Tesla fans could proudly say “Well, some journalists and commentators may have subtracted the $7500 federal tax credit from the price quoted for Tesla’s cars, including the Model 3, but no Tesla spokesman ever cited a Model 3 price that included any Federal or State tax credit!

The way Tesla’s website now displays the “price with an asterisk (*)” is all too reminiscent of the sort of bait-and-switch advertised prices that legacy auto makers’ dealerships use; the sort of sleazy sales techniques which get them called “stealerships” by a lot of EV advocates. 🙁

Here’s hoping that Tesla will realize this is creating bad publicity for them, and change they way their website displays prices!

Jason

Look, at the end of the day Tesla is much the same as any other company. It is there to sell its products and make a profit. Sure, it has a commendable mission, but really it is a capitalist company in a capitalist country.
I don’t agree with this format, it does undermine their good will. Just realise as they grow bigger this is the sort of stunt that will happen. If Elon goes you can be sure it will be like Apple when Steve Jobs left and they suddenly became greedy and lost their way.

Dave100e

I agree, and unfortunately if they want to stay sustainable and continue growth as they are they are going to have to slowly introduce more profiteering type tactics. Right now Tesla has the USP of being the best EV manufacturer out there, but in future that isn’t a given and the market may become way more competitive.

Shane

NOW I understand why people buy cell phone contracts and airline tickets from most companies: people aren’t smart enough to read THE BOTTOM LINE. Every car company advertises prices “after savings.” Too many numbers is confusing to most buyers.

In my case, my Tesla cost pretty much exactly what the Tesla website said it would. I am indeed getting the gasoline savings promised and the tax credits, too.