Tesla Releases “Lower Cost” Model 3 For $45,000 As Full Self-Driving Option Mysteriously Vanishes

Tesla has finally released a $35,000 Model 3. The only problem? It costs $45,000. On top of that, the often touted $3,000 add-on option for “Full Self Driving” capability has mysteriously disappeared from the company’s website, leaving those who have already paid for it or put down deposits on vehicles assuming they could get it wondering what, exactly, is going on.

This all started on Thursday when Elon Musk tweeted that Tesla would now be offering a “low cost” $45,000 mid-range Model 3 that, according to him, would cost $31,000 after tax credits and “gas savings”.

This move has left analysts, Tesla owners and Wall Street asking obvious questions. Has higher priced Model 3 demand finally collapsed? Could this be Musk’s move to keep cars rolling off the production line for another quarter? Does Elon Musk think this is just as good as offering the $35,000 Model prior to incentives? While the reasoning for offering this model now isn’t clear, it’s likely that the reality of the situation is a widening delta from Elon Musk’s perceived reality. 

First, the Model 3 was pitched to the public (and reservations were taken) under the guise that it would be available for $35,000 prior to tax incentives. This model still doesn’t exist, and we are getting ready to turn the calendar to 2019.

Second, the Federal Income Tax Credit that Musk pitches is slated to disappear in 2020. For the first half of 2019, it will be halved, and then halved again for the second half of 2019. Obviously, to assume that the full $7,500 would be taken off of the Model 3 price as a perpetuity is disingenuous, because it may only be available for another 9 or 10 weeks.

Third, Musk includes a ridiculous and arbitrary $4,300 number for “gas savings” which is calculated over the course of six years, assuming your bumper and/or wheels haven’t fallen off the car by then. 

While the price of the low-end Model 3 has now theoretically been slashed by $4,000, even though the battery range is less, the “cheaper” long range rear wheel drive Model 3 is no longer available and the price of the remaining long range Model 3 (AWD) has been bumped up to $54,000 from $49,000.

Then there’s the topic of Full Self Driving (FSD) capabilities. Skeptics had often honed in on full self driving as “vaporware”, stating that most Tesla models available now wouldn’t have the hardware to implement it once the software was available and FSD became legal in their jurisdictions.

FSD features were a $3,000 add-on for Tesla models that the company began offering as an option in October 2016. Supposedly the $3,000 would enable you to eventually unlock a feature that would allow your already-hardware-equipped Tesla to make door to door trips for you in their entirety: the driveways, the back roads, the unmarked city traffic, the highways, and back to the driveways and parking lots again. Full self driving was touted as a step above Autopilot, which isn’t really Autopilot, so much as it’s essentially just enhanced cruise control that still requires the driver’s attention.

Confusing, right? Elon thought so, too. So, he cleared up the situation by simply removing Full Self Driving in its entirety from Tesla’s website without explaining anything to those who already purchased it or put down deposits based on it.

Tesla cultists were up in arms about the dropping of FSD from the company’s website, as seen on social media and Reddit. Some customers who had already ordered the option have reportedly seen it dropped from their orders.

Even Tesla’s de facto PR team over at electrek was confused.

Lest we forget that FSD is the crux behind many bullish Tesla price targets, including Ark’s mentally unstable optimistic $4,000 price target, which relies heavily on Tesla Mobility. Morgan Stanley has also frequently referenced Tesla Mobility in its long-term Tesla models that it uses to arrive at optimistic targets. 

Musk offered little explanation for dropping the fully self driving option, aside from that it was “causing too much confusion” and that it would still be available “off menu” for a couple of weeks. For those who choose to still purchase it “off menu”, a good question may be “what, exactly, am I buying?”

It seems the remaining confusion” is something the company hasn’t cleared up. Those who put down reservations looking for a $35,000 pre-tax credit vehicle with fully self driving features likely can’t help but feel slighted by this most recent announcement, which feels awfully close to the traditional bait and switch.

Assuming Musk doesn’t berate and hang up on the analysts on the company’s forthcoming conference call, there’s a good chance he’s going to have to answer some difficult questions about these most recent changes. For now, Tesla stock will probably rally on this “bullish” news.

SOURCE:

www.zerohedge.com

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