Tesla's Model 3 Now Costs Less Than the Average New Car

Tesla's Model 3 now costs less than the average new car

Tesla

For years, auto investors have placed bets on when electric cars would reach price parity with their combustion counterparts. With Tesla's recent price cuts and government incentives, the company has now achieved this milestone for the Model 3. A Model 3 is now less than the average price of a new car, making it a more affordable alternative for drivers looking to transition to electric or upgrade their vehicle.

The Price Gap Between EVs and Gas Cars

According to Bloomberg's analysis, the price gap between the Model 3 and the average new vehicle sold in the US has never been wider. A Model 3 is now $4,930 less than the average price of a new car. Without credits or fuel savings, the sticker price ($42,999 USD) now sits $800 below the cheapest BMW 3 Series, one of its closest competitors.

While Tesla is reducing the price tag, the cost of gasoline-fueled cars has gone in the opposite direction. The average cost of a new vehicle has risen more than $10,000 since the beginning of the pandemic, reaching $47,920 in January. This rise is driven by a shortage of computer chips, raw material inflation, and car manufacturers' decisions to keep inventories low and prices high while investing heavily in developing electric cars.

Expanding EV Market

Tesla's price cuts have sparked a ripple effect among other automakers. Ford has slashed the price of its electric Mustang Mach-E, while Lucid Group offered $7,500 discounts, and Rivian Automotive announced layoffs. In addition, General Motors is slated to launch electric versions of its Chevrolet Blazer and Equinox SUVs later this year, right in the middle of America's first-ever EV price war. Meanwhile, the Model Y has also seen a substantial price cut of $13,000 earlier this year, making it the third-best-selling SUV in the US, behind the Toyota RAV4 and Honda CR-V.

Affordability Driving EV Adoption

That price tag may decrease even further when the refreshed Model 3 appears. Reuters reported that Project Highland would go into production in Shanghai in September. The goal of the refreshed Model 3 is to increase efficiency and cut production costs. We already know Tesla is eliminating the wood trim in the updated version, a cost-saving and environmentally friendly move. While the changes could bring the price down, it is worth noting that when Tesla refreshed the Model S and Model X, the prices jumped by 12% and 15%.

The increasing affordability of Tesla's vehicles may drive the adoption of electric cars and contribute to the growth of the EV market. If Tesla can continue to offer price cuts, it could attract more new buyers as the company ramps up production at its new plants in Austin, Texas, and near Berlin, while expanding capacity in Shanghai. There's never been a better time to buy a Tesla.

Will Tesla Launch a 'Robotaxi' Network With Tesla Drivers?

During Tesla’s Q1 earnings call, Tesla talked about its plan for its upcoming robotaxi network and even showed off a design for the app that would allow customers to request vehicles, much like Uber and Lyft.

While Tesla plans to unveil the robotaxi, officially now called CyberCab this August, a true autonomous taxi is at the very least, a couple of years away. So why is Tesla so eager to show off an app and start offering a Tesla taxi service?

in 2023 Uber had a revenue of 37.28 billion, while Lyft had a much smaller revenue of 4.4 billion. For comparison, Tesla’s revenue last year was 96.77 billion. A taxi service, even one operated by humans can be incredibly lucrative. While Tesla’s ultimate goal may be an automated taxi service, they may be itching to get into the space.

Tesla’s robotaxi was initially supposed to be a taxi service owners would lend their vehicles to. While that’s still the plan, Tesla wants their own vehicles to be a part of the service as well.

Will the Robotaxi Service Start With Tesla Drivers?

Tesla comparing themselves to Airbnb and Uber during their earnings call is intriguing. While Tesla can start producing robotaxis almost whenever they want, it’d likely be smart to wait until autonomy is solved so they’re not limiting themselves to current FSD hardware.

While full autonomy is likely several years away, Tesla seems to be eager to make this push toward a Tesla-owned service. Is Tesla thinking about operating their own Uber-like service? Tesla could be thinking about releasing their future robotaxi app and service in “beta,” letting current Tesla owners operate their own vehicles on the service.

This could result in several benefits for Tesla, not only letting them test their service but also opening up another revenue stream. This would allow Tesla to start operating their robotaxi network as soon as this year, and then slowly replace drivers and owner vehicles with Tesla-owned robotaxis.

Tesla Shows Off Robotaxi App

Tesla showed off it's robotaxi app

At the earnings call, Tesla also showed off a design of their robotaxi app. While it feels early to design an app for a service that could be years away, Tesla appears to be preparing itself for the future and getting customers excited about the prospect.

Tesla showed off five screens of the app, essentially showing how you’d request a robotaxi, how you can view its progress, and control certain features of the vehicle. Through the various screens, you can see most of Tesla’s Autopilot features coming to fruition in terms of autonomy, such as summon, self-driving and eventually Autopark.

Summon - Much like Tesla has re-thought the interior of a car and so many features, you can see the same mechanics applied to the app. To request a vehicle, you simply hold down a summon button and you’ll be presented with an estimate of when a vehicle will arrive.

Set Preferences and Destination - On the second screen, you can see the vehicle’s current location on a 3D map, possibly alluding to future FSD visualizations. It also lets you set your destination and set the climate temperature to your preference.

Trip Progress - While you’re traveling in the vehicle, you’ll be able to view trip information as well as set entertainment options.

Recap

Tesla had a lot to talk about during their earnings call and specifically about the Robotaxi — more information was revealed than ever before.

While there are various things at play to make a service like this come together, we can easily separate them out into separate components.

There’s the robotaxi itself, which Musk recently said would be similar to Tesla’s next-gen vehicle without a steering wheel. However, during this earnings call, he revealed that Tesla will save its new “unboxed” manufacturing process for the robotaxi and use a more traditional method for their next vehicle.

Then there’s FSD itself, while it’s crucial to operating a driverless robotaxi network, it’s not necessary to start a Tesla taxi service.

The last piece is the ride-hailing component itself and how it’s managed, and Tesla was happy to show this off, which makes us believe that it may be closer to reality than many think. While Tesla needs all three of these components to come together to operate a true robotaxi network, they piece them together separately, much like they’ve done with Autopilot. Initially, Tesla only released auto-steer then slowly added on summon, Autopark and city driving.

When we look back at Tesla five years from now, we may very well look back to this earnings call and say this was the pivotal moment when Tesla started transitioning to a services company.

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Tesla Reveals Robotaxi App and Names the Robotaxi the CyberCab

Tesla has invested billions of dollars over the years toward vehicle autonomy. The mission continues as Elon Musk and Tesla now prepare to unveil their ride-hailing product, Robotaxi this August. Or, as Musk called it on Tuesday, Tesla CyberCab.

Early Days

Five years ago, during Tesla’s Autonomy Investor Day in April 2019, Elon Musk said he felt “very confident predicting autonomous robotaxis for Tesla in the following year [2020]”. At the time, Musk added a bolder claim, predicting that Tesla wouldn’t even make cars with steering wheels or pedals by 2022. While timeliness may not be Musk’s strong suit, he has a track record for getting things done that others were unwilling to try or thought were impossible. Musk later admitted he can be overly optimistic and said “sometimes I am not on time, but I get it done.” 

Now, 5 years later, we have the robotaxi unveiling scheduled for August 8th. After the release of FSD v12, it’s clear that we’re much closer to autonomy than we were in 2019, although FSD v12 is still a far cry from full autonomy.

While Tesla still has the robotaxi unveiling scheduled for August, Tesla announced yesterday that it’d be prioritizing a simpler “next-gen” model that could be released by early 2025.

Latest Updates

On the conference call, Musk added that Tesla now has over 300 million miles driven with FSD v12 since it was launched just last month. He added that it's becoming “very clear that the vision-based approach with end-to-end neural networks is the right solution for scalable autonomy”.

Tesla said it has been investing in the hardware and software ecosystems necessary to achieve vehicle autonomy and a ride-hailing service. The company is confident that it can establish a scalable and profitable autonomous driving business by employing a vision-only architecture.

think of it [Tesla] as combination of Airbnb and Uber meaning that there will be some number of cars that Tesla owns itself and operates

Tesla = Uber + AirBnb

Later on, Elon Musk unveiled that the new service will operate and result in a mix between Uber and Airbnb where the Tesla driver decides if and when he wants his Tesla to be used and by whom. Tesla stated:

“We believe the Tesla software experience is best-in-class across all our products, and plan to seamlessly layer ride-hailing into the Tesla App.”

Tesla’s CEO clarified that the owners will be able to add or remove their car from the fleet “whenever they want” adding that it will be up to them to decide if they want to only let the car be used “by friends and family or only by five-star users or by anyone at any time”. The flexible program will, just like Airbnb, allow the owners to take the car out of the market when they want.

The upcoming ride-hailing service will enable users to easily request a Tesla vehicle, control the car's temperature, monitor its real-time location, and adjust the audio system. The only question is when.

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