Tesla’s Affordable New Model Set to Be 32% Cheaper Than Base Model 3

This article does not constitute investment advice. The author does not hold any positions in the stocks discussed herein.

Tesla’s Game-Changing Low-Cost Model

Anticipation is building around Tesla’s forthcoming low-cost model, which promises significant savings for consumers. However, this comes with uncertainties, particularly regarding the potential elimination of the $7, 500 federal EV tax credit under the Trump administration.

Pricing Strategies and Comparisons

According to Cantor Fitzgerald analyst Andres Sheppard, the new model is projected to be priced around $30, 000 when factoring in U. S.federal tax credits. Without these incentives, the estimated cost could rise to approximately $37, 500. This pricing strategy positions the new vehicle as approximately 32% cheaper than the current base version of the Model 3 (LR RWD), which retails at about $44, 130.

Design and Market Impact

The upcoming lower-cost models are expected to maintain the design aesthetics of Tesla’s existing lineup, albeit with more basic features. Future Fund’s Gary Black suggests that these models may not significantly expand Tesla’s Total Addressable Market (TAM).Instead, they might negatively affect the company’s overall profit margins.

Future Catalysts for Growth

Despite the anticipated challenges, Sheppard has highlighted several optimistic catalysts for Tesla’s growth trajectory. These include the rollout of Full Self-Driving (FSD) capabilities in China, expected to commence in the first quarter of 2025, as well as the launch in Europe anticipated in the first half of 2025, contingent on regulatory approvals.

Autonomous Innovations and Challenges

Furthermore, Sheppard expects increased production of the Optimus Bot by 2026 and initial deliveries to customers in 2027, alongside the introduction of the Semi Truck, which is projected to begin operations in 2026.

The analyst summarizes:

“Overall we continue to see future revenue upside from FSD, Robotaxi, Energy Storage & Deployment, and Optimus Bots to be fundamental to TSLA’s thesis over the long term. However, we expect some near-term headwinds due to macro conditions, tariffs, Musk’s polarizing politics, and the likely removal of the EV Tax Credit (we expect in 4Q25/2026).

Projected EV Deliveries and Market Dynamics

In light of recent analyses, Tesla is projected to deliver approximately 355, 000 electric vehicles (EVs) in the second quarter of 2025, as indicated by trends observed on the Kalshi platform. This follows a delivery figure of 336, 681 units in the first quarter of 2025, which was overshadowed by an underlying production capability of 362, 615 units. Elon Musk attributed the deceleration in sales momentum to factory retooling efforts for the new Model Y, a circumstance that has raised concerns ahead of the Q1 delivery report.

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