Tesla seemingly deceptive Model 3 pricing will continue.
John Goreham's picture

Tesla's Seemingly Deceptive Pricing For Model 3 Will Continue Into Second Year of Sales

Tesla publicizes a low entry price for its Model 3, but has never sold a vehicle at even close to that price. With no push-back from the media or regulators, the flim-flam has now been extended.
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Imagine if Apple advertised its new iPhone X at $699, but when you got to the Apple Store, or went online, the only one Apple would sell you would cost over $900. How do you think customers and government consumer protection groups would respond to that sort of bait and switch pricing? Imagine if Exxon Mobil put up signs at its gas stations advertising gasoline at $1.99, but when you got to the pump, the cheapest gas that station stocked – or had ever stocked since the sign went up - was priced at $2.62? There are laws in America that prevent this sort of price manipulation to take advantage of consumers, and many of them apply specifically to cars. Yet, for well over a year now, Tesla has been marketing its new Model 3 as a car that “Starts at $35,000.” Although the Model 3 has now been on sale for nine months, Tesla has never built a Model 3 that had a $35,000 sell price. And it doesn’t plan to do so any time soon.

The mass media, who often has little understanding of the details or background on what automotive topic they are reporting on, has been Tesla’s partner in this. Sadly, so too has the automotive media, including groups like Consumer Reports and Popular Mechanics. They report in their reviews and articles that the Model 3 has a base model that “starts at $35,000.” Yet, Tesla doesn’t have a model that it builds or sells that starts at $35,000. It’s cheapest available Model 3 from the first day it went on sale in July of 2017 until today, is sold at $46,000 before options are added. Most of the Model 3 cars sold to publications have actual prices near $60K.

Here are a few headlines and quotes from some media outlets reporting on the Model 3:
- Men’s Journal
The headline is typical. Meet the $35,000 Tesla Model 3. The quotation at the start of the story is, “The $35,000 Tesla Model 3 is finally here. Elon Musk revealed the EV meant for the masses Thursday night in Los Angeles — a proper five-seater that is sleek, quick, and, most importantly, starts at $35,000.”
- CNN Money
The headline is, Tesla Model 3: $35,000 Price, but Buyers Could Pay $25,000. The quote in the story is “Tesla’s affordable new electric car might be even more affordable than we were led to believe.”
- Inside EVs
The headline is Tesla Model 3 Arrives: 215 Miles Of Range, $35,000 – Full Details. In the story the quote is “The Tesla CEO was also quick to point out that the long-promised price-point of $35,000 was also still in play…”

In fairness to the above publications, they didn’t realize at the time that they published these stories that they were being flim-flammed. An automaker claiming a price and then selling cars dramatically higher wasn’t something common. After all, it’s illegal. And unethical, and any publication that carried water for an automaker who lied to them, would surely never trust the automaker again– right? Don’t kid yourself. Splashy headlines get pageviews, and plausible deniability is golden.

Now that the cat is out of the bag and multiple outlets, including Torque News, have done their best to clarify that the base Model 3 has never been built, and isn’t scheduled to be anytime soon, one would assume that trusted publications aren’t spreading the myth of the $35,000 Tesla Model 3 around anymore. Right? Wrong.

Consumer Reports, who is at its core a consumer protection group, still writes as recently as last month, “With a promised starting price of $35,000, Tesla is aiming the Model 3 at cars such as the the Audi A4 and BMW 3 Series—but without any emissions.” Yet, Consumer Reports knew full well that there was no $35,000 Tesla Model 3 actually for sale. The group had just bought one and paid $59,000.

In the May 2018 print edition of Popular Mechanics, the publication names the Tesla Model 3 “The (Most Fun) Car of The Year.” In the “specs” section, Popular Mechanics lists the Model 3 as having a “Base Price” of $35,000. Yet, there is no base price Model 3 for sale, or ever having been sold, with a price of $35,000. And Popular Mechanics knows this. The one they tested cost $55,000. The author points out that $55,000 is “a lot more than $35,000.” He also says that he’d skip all the options except Autopilot and get a less expensive one. Except Tesla won’t build that car for Popular Mechanics, for you, for me, or for anyone. And it never has. How do we know that? Clean Technica tried to do it.

The latest news on the base Tesla Model 3 is that Tesla won’t build any “$35,000 base” Model 3 cars until late 2018. That means that the Model 3 will have been on sale and customers will have been receiving deliveries for over a year at a minimum before the version that made all the headlines may show up. EV advocacy publication Clean Technica says about the ongoing delay of the low-priced model, "If nothing else, that suggests a willingness to fudge the facts and borders on willful deception."

Imagine if Apple promised you a $699 iPhone X, but told you to come back in 13 months (but you can pay over $900 now). Or if Exxon Mobil promised you $1.99 gas, but said come back in May of 2019 (or you could just pay $2.62 now). Imagine the outrage by consumers and the media, and imagine the government lawsuits.


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Comments

Well, those who follow the EV business know that this is not the first time Musk has pulled this stuff - he claimed for more than a year that the Model S would cost $49,000. When they started making them the base price jumped at least $10,000. But Tesla cult members took this in stride, all the time claiming that teh major automakes were dragging their feet. They hardly noticed when GM started selling a Model3 level SUV - the Bolt - for roughly $36,000 , about a full year before the first actual production line Model 3 cars came to market, and at that the Model 3s were only test versions for friends and relatives of the company. Musk claimed they were building the higher optioned Model 3s first because it somehow was required by the production line. The profit margin for the optioned Model 3s is a lot larger than for the base model. The $9,000 larger battery option requires $3600 worth of extra batteries.
So - Tesla is a business. They had roughly 400,000 consumers put a deposit down in the first 2-4 days of taking reservations. They have one manufacturing plant. The premium interior is a $5,000 option. the LR battery is a $9,000 option. Do you think it would make sense for Tesla, and would their shareholders be happy, to manufacturer the SR battery first and the non-premium interior? Remember - as they ramp up production, they need to hire more people which costs money. Or - do you look at a backlog of orders and say - hmmm, there's a lot of people out there who want 310 miles of range AND the premium interior - let's build 50,000 of those first, and ramp up production so that we can start building BOTH types? I mean - this is pretty basic business decision making.
Yes tesla are a business. It came as a surprise that the Standard Range $35,000 was originally announced to be the second model off the assembly line after the "first production" vehicles. That promise will not be met, its clear that dual motor vehicles will be next. Had Tesla announced they would start with the fully loaded M3 first then work its way down to the $35,000 model that would be fine. But instead they promised the Standard range model to be second. It's the break of promise that's the issue, not that they are maximising shareholder value.
When did tesla promise that the second vehicle produced would be a standard range vehicle?
That is the $64,000 question.
What else would you expect from Elon Musk? He's a PORKYpine!
Unfortunately, it's not just Tesla that is engaging in unethical selling practices. In my area (Florida) every dealer, recently visited, has alongside the Monroney Window Sticker, another window sticker with additional dealer markup. The items listed on the added sticker are overpriced junk I don’t want, making the vehicle, as with Tesla, unavailable at the MSRP. My reaction is that I feel being had inside these dealerships and have zero plans to encourage the unsavory practice by buying a new vehicle. Short version: No sale...
Wow. The only honest Tesla article Imread so far.. well done sir.. Musk Media Madness is out of hand.. simple facts like the one you outlined are PURPOSELY ignored by the media..
From day one, Tesla stated that the premium version of the Model 3 would be the first one available and the base model would come later. As for the Model S, there were cars sold at the advertised $50k price. There was such little demand for the short range version of that car that it was dropped early on.
Prove it. In 2014 Elon Musk was talking about the Model E (original name of Model III) having a 200-mile range. In 2015 he was talking about the car having a $35 price with zero qualifiers.
In 1971 to 1973 I worked for Eagle Ford in Stockton CA. Back then the markups were not shown on the car windows. We just kept adding "stuff" until the customer was ready to walk out. Then we sales people passed the prospect along to the finance guy who really closed the deal. I can remember my dad buying a 1954 Mercury and the deal was the same. Nothing has changed.
Can you please point me to where Tesla has had any "marketing" of a $35,000 car? Also - can you look up every single manufacturer's lease/sales ads and tell me if you can successfully get the advertised lease price on the commercial or the advertised sales price with all of the rebates that most consumers don't qualify for?
Of course, we can point you to many examples of Tesla's marketing of the Model 3 at $35K. Try the CNN Money link in the story. When it opens, go to the second paragraph. See the link to the tweet from Elon Musk in 2015. It still works. We (or CNN, or Musk himself on Twitter) could give you a dozen examples, but would any of them change your view?
So, he basically convinced something approaching a half million of us to give him an interest-free loan of $1,000 each for somewhere between 18 months and who knows when...? I suppose it could stretch out to a point where some of us will not qualify for the $7,500 federal tax credit as well... It does seem somewhat deceptive and unethical doesn't it? Wouldn't one believe they could build the same car with a smaller battery pack or a less deluxe interior option without destroying their less than spectacular production rates? What's so difficult about installing a different seat or door panel?
John - you're being misleading. The $35,000 Model 3 does exist. They're just not building it yet. Originally, they weren't planning on building any of these before 2019/2020 - but due to the incredible demand for reservations early on, they came up with a much more aggressive schedule. the $35,000 model will be delivering later this year or early 2019. So - you can make these claims about Tesla "marketing" (they haven't paid for any ads that I'm aware of) a $35,000 car and not being able to deliver it - but it's just not true. As for the media coverage - if you want to argue that Tesla is getting unfair positive coverage in the media - i'd love to ask you when the last time you saw national attention paid to any other company's vehicle catching fire or brakes failing or cruise control malfunctioning or any other part of the car not working properly.
Thank you for your article. It's a classic bait-and-switch. They promised hundreds of thousands of consumers a $35K vehicle a year ago and got each of them to pay $1000. Now they are asking all of them to instead buy a much more expensive vehicle. Many are doing so because they know the tax credit is going away. I don't understand why state consumer protection agencies are not investigating this.
Out of everybody who is complaining about the lack of $35k Model 3; just how many of you all put down a deposit. Raise your hands now. Okay no hands went up. Stop the blah blah and remember that every car dealer has pulled a bait-n-switch by putting a low-ball priced single vehicle into their TV ad or newspaper ad.
John O, thank you for illustrating that Tesla's sales practices are very similar to the ones that we all have hated from dealerships for so long. We all hoped Tesla would be different or special, but is proving to not be the case (in this regard). We first reported on the similarities between Tesla and the old school car dealers about a year ago. Your comment would make a great fourth similarity. Here's that prior story, you have to cut and past since our comments don't support links. BTW, Both Edmunds and Consumer Reports' employees asked for a $35K Model 3s and Tesla declined to build the cars that were reserved very early. CR's ended up costing $59K. https://www.torquenews.com/1083/5-surprises-tesla-model-3-buyers-sick-dealership-hassles