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Tesla has increased the price of two Model 3 variants while simultaneously revising its order and return policies, signaling a strategic shift as it prepares for its Q3 earnings report and expands production in China.
In a move that has caught the attention of both potential buyers and investors, Tesla has implemented a series of updates affecting its most popular vehicle, the Model 3. The most immediate change is a price increase on two of the three available versions. This adjustment comes alongside a significant revision to the company's deposit and return policies, adding new layers of consideration for anyone planning a Tesla purchase. These developments occur amidst growing competition from legacy automakers like Ford and as Tesla advances its global production goals.
The price changes are specific to two trim levels of the Model 3 sedan. The Standard Range Plus version, which is the most affordable Model 3 listed online, saw a $500 increase, raising its price to $39,490. Interestingly, this model also received a boost to its official driving range rating, which improved from 240 miles to 250 miles on a single charge. This range figure represents the estimated distance the vehicle can travel under specific testing conditions before its battery requires recharging.
The high-performance Model 3 Performance version experienced a more substantial price hike of $1,000, bringing its total cost to $56,990. The Long Range All-Wheel-Drive version's price remained unchanged. These increments follow a period of price reductions earlier in the year, which were linked to the phased expiration of the federal EV tax credit. This credit is a financial incentive provided by the U.S. government to encourage the adoption of electric vehicles.
| Model 3 Trim Level | Previous Price | New Price | Increase | New Range Rating |
|---|---|---|---|---|
| Standard Range Plus | $38,990 | $39,490 | +$500 | 250 miles |
| Long Range AWD | $47,990 | $47,990 | $0 | 310 miles |
| Performance | $55,990 | $56,990 | +$1,000 | 299 miles |
Beyond pricing, Tesla has made notable changes to its customer purchase agreement. The non-refundable order fee has been lowered to $100, which is less than previous refundable deposits. However, the company has introduced stricter terms for its once-lenient return policy.
While Tesla still technically allows a return within "seven days or less than 1,000 miles," it has added a significant condition. A customer who returns a vehicle is now prohibited from purchasing the same trim level for a period of one year. Based on our assessment experience, this is likely a measure to prevent abuse of the return policy, such as using it for short-term test drives or arbitraging price changes. The policy does not prevent the customer from buying a different Tesla model or a different trim level of the same model within that year.
In a major step for its global expansion, Tesla has received official certification from the Chinese government to begin production at its new factory in Shanghai. This approval, reported by Reuters, is a critical milestone. Yale Zhang, head of the Shanghai-based consultancy Automotive Foresight, stated, "The green light is fully given to Tesla for production in China," meaning the company can start building cars locally at any time.
Local production in China is strategically important for Tesla for two key reasons. First, it allows the company to avoid significant import tariffs, potentially making its vehicles more competitively priced in the world's largest automotive market. Second, it establishes a dedicated manufacturing hub to supply the Asian region, reducing reliance on its Fremont, California factory.
As Tesla prepares for the 2020 launch of its Model Y compact crossover, rival Ford has provided new details about its own competing electric vehicle. Ford has announced that its "Mustang-inspired" electric crossover, also due in late 2020, will feature seamless integration with the Electrify America fast-charging network through the FordPass app. Electrify America is a Volkswagen subsidiary that is building out a national network of high-speed charging stations.
Ford's announcement indicated that its EV will aim for an optimal 300-mile range rating with an "extended battery and rear-wheel drive." This phrasing suggests that Ford may offer multiple battery options and an all-wheel-drive version, similar to Tesla's strategy. This direct competition highlights the rapidly increasing options for consumers in the electric crossover segment.
A compelling real-world example of Tesla's advanced driver-assistance system, known as Autopilot, was recently captured on video by a Model 3 owner. The driver reported that while using Autopilot near Glacier National Park in Montana, the system detected a mother bear and her cubs on the road after dark. The Autopilot system automatically initiated braking and brought the car to a complete stop, avoiding a potential collision.
This event, while anecdotal, demonstrates the potential safety benefits of these systems. The driver's built-in Dashcam feature recorded the incident, showing the vehicle's ability to recognize and react to unexpected obstacles beyond typical vehicular traffic. It is a reminder that these systems are designed to assist an alert driver, not replace them.
To summarize the key takeaways for potential buyers and investors:
