Is it a good time to buy a Model 3 or Model Y?
By radically lowering the prices of the Model 3 and Model Y, Tesla completely changed the cards in the electric car field. These two models were already recommended, but they become really important. Should I buy them now or wait? Here are some answers.
We know Tesla and price cuts. When it went on sale in France, the Tesla Model 3 in the Standard Range+ version (now called Propulsion) sold for around 50,000 euros. At the beginning of 2021, the Texan manufacturer significantly reduced the selling price of the entry-level version from 45,000 euros. With the bonus cap effects, we moved to a closing price of €36,800 and a drop of over €10,000.
An increase of 17,000 euros in a few months
The party lasted more than a year before the price went up, preventing Elon Musk’s car from qualifying for the maximum environmental bonus. The car saw several price increases throughout 2022, finally dropping to €53,490. With the new bonus 2023, the car costs almost 17,000 euros. Many potential customers therefore turned down the Model 3 and ordered the Tesla Model Y Propulsion, as it is priced at €49,990 and goes on sale in September 2022.
The low price of the Model Y Velocity in France was an anomaly we’ve found time and time again. We expected a price adjustment that would allow the Model Y to sell for more than the Model 3 in the long run. But we didn’t expect this price drop for Tesla’s two electric cars. And especially not with such a big drop!
Elon Musk promised last summer that Tesla prices could fall if inflation eased. So all signs suggested that Tesla would raise the price of the Model Y Propulsion in a few months, putting it back in front of the Model 3 Propulsion. As prices drop this week, The Model 3 now sells for less than the Model Y, but not with a price hike for the SUV. Great news for potential customers of the Texan manufacturer.
The biggest question we can ask ourselves is: with this new price drop, should we rush the Tesla Model 3 and Model Y or should we still wait? In other words, are the new prices the deal of the year?
Let’s take the problem point by point to try to answer this delicate question.
Price uncertainty for the coming months
If you want to buy a Model 3 or Model Y, the first argument that makes us rush to the Tesla showroom is the certainty that Elon Musk’s electric cars are hardly cheap . Far be it from us to declare that Tesla is selling at a loss at these prices, but they seem really low to us.
Especially since 2021, the price of Tesla has fallen all over the world: in China, Europe, and also in the United States. Across the Atlantic, the Model S and Model X also saw their prices drop this week.
So yes, Tesla’s operating margin is huge. This the manufacturer that makes the most money from the sale of its carscompared to other major manufacturers. In China, Tesla earned $9,711 per vehicle sold in Q3 2022, compared to $7,469 for Mercedes and $5,949 for General Motors. As you can see from the Asian media chart, the difference is huge IT House.
Looking at global figures, Tesla sold 343,830 electric cars in the same period and earned $4,968 million in revenue. I mean earned more than 14,000 euros per car sold. Tesla may therefore lower prices, but with cuts from €3,000 to €11,000 in France and similar amounts in China and the US, margin squeezes are inevitable in the coming months.
So the main question is whether Tesla can afford to maintain these prices long-term or is it fair. a way to clear inventory and increase demandenabling factories to operate at full capacity.
Discount for filling the order book?
Keep in mind that Tesla is currently experiencing subtle issues with inventory and demand. This is the first time that an American company has so many shares. It is for this reason that at the end of 2022 we saw a lot of discounts and giveaways around the world to try to sell everything by December 31st to make investors look good.
On the demand side, various price cuts in China in the second half of 2022 have raised many concerns among analysts in the auto industry. Over time, delivery times in China have been reducedas if Tesla had a lot of electric cars to sell.
So much so that the Vice President of Tesla China had to speak out to refute his rumours. Tesla made the same speech during the recent price drop in France. In fact, the manufacturer justifies this price drop by optimizing production and logistics and a quieter period (end of COVID, stabilization of the war in Ukraine, less severe semiconductor crisis, etc.). According to Tesla, it is enough to see a calmer future and adjust prices accordingly.
If Tesla lowers prices to boost demand, and therefore production at its factories, the risk is that car prices will rise again when factories are operating at full capacity and struggling to meet demand. This situation is not unthinkable, because it has already happened in recent months, some models required more than 12 months after order and production and then delivery.
The evolution of the environmental bonus
It should not be forgotten that thanks to the environmental bonus mechanism in France, the prices of Model 3 Propulsion and Model Y Propulsion are indeed very low compared to other markets. And we don’t know how it will develop in 2023. Perhaps it will decrease for the wealthiest families. Will this happen in 2023 or rather 2024? It is impossible to predict.
In addition, if you can take advantage of the conversion bonus (scrap bonus), then the rates are even more affordable. Admittedly, it is higher than the average selling price of a car in France (about 25,000 euros), but much cheaper than equivalent electric cars.
In other words, Tesla Model 3 Propulsion and Model Y Propulsion currently have the best value for money in the automotive industry. The competition certainly shouldn’t welcome this price cut.
Could Teslas be cheaper?
It is unclear whether Tesla will raise the prices of the Model 3 and Model Y in the coming months. But there is a possibility. If so, it is not immediately, but when the Gigafactories around the world are saturated. Which will take some time. Especially since the production capacities are staggering: if we take into account the production of the 4th quarter of 2022, about 1.6 million cars per year, but with all the plants at full capacity, it could be 2.5 million.
So the big question is whether Tesla can lower its prices further despite the current inflation and the rising cost of raw materials, especially the lithium needed for battery production.
As we have seen above, this possibility should be ruled out in the short term, at the risk of Tesla selling at a loss or excessively reducing its innovation capabilities. The American company needs money to expand and especially to get new factories off the ground.
If Elon Musk’s firm is currently the leader in the electric car industry, ahead of Chinese giant BYD (dangerously taking over), it is still ahead of traditional players like Volkswagen. But the latter are huge investments, with a production capacity of several million cars per year (all engines combined) for each.
In any case, at their prices, the Tesla Model 3 and Model Y are certain to be hits in France, Europe, the US and China. Elon Musk’s goal of making the Model Y the world’s best-selling car by 2023 is no stretch of the imagination. Likely. This would make it the first electric car to bear the name.
Should you buy a Tesla Model 3 or Model Y now?
You will understand this while reading this file. If you’re currently in the market for an electric car and looking for a Model 3 or Model Y, now is the time to act.
Indeed, it is almost certain that the prices of these two models will not drop in the coming months. If the competition doesn’t match those rates, there’s no reason. But this is impossible, because the opponents have very little room for maneuver. And on the contrary, they slowly increase the price of their cars.
On the contrary, the price of Model 3 and Model Y has a chance to increase in the future. The unanswered question: when?
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