Tesla’s Planned $25k Car Could End Up Being Half That Price When Incentives Kick In

Tesla Model 2 is planned to come out in next few years. The Tesla Model 2 isn’t even expected to be unveiled until the end of this year. That means production could be as much as 2 to 3 years away. If the Model 2 is released, it will be a very important vehicle for Tesla. It will also be a main staple in the Electric Vehicle industry. This car has the potential to sell lots of units for Tesla. The Model 2 could help lower the price of the Model 3 by decreasing demand for the Model 3. Many of those buyers would opt for the smaller and cheaper Model 2 instead. This is important because the Model 3’s price has been raised in recent weeks.

Where we are at now

$13,500 california EV incentives if $10,000 federal thing happens

$25k tesla for about $11,500

with fuel savings, cheaper than a Mac Pro @elonmusk

— Whole Mars Catalog (@WholeMarsBlog) March 30, 2021

These new incentives are not set in stone. The first thing that needs to happen is that $10,000 of federal incentives for EV’s has to be put into place. The second thing that needs to happen is that Tesla needs to produce and deliver the Model 2. Both of these events have a high likelihood of happening.

Potential Incentives

The list of potential incentives on a $25,000 car is a long one. There are a good number of incentives that require many conditions in order to qualify for them. For example, the first incentive listed here is a California clean fuel reward. This is a $1,500 incentive, and unfortunately it only applies to residents of California. There is also a clean vehicle assistance program listed that is a $5,000 program. Another incentive is a clean cars for all grant which is worth $5,500. After you take delivery of your vehicle, there is then a clean vehicle rebate project that is $2,000.

Adding up these incentives

If an individual qualified for all these incentives, they could get $14,000 or more shaved off the purchase price of a new vehicle. With all these incentives, a new Tesla Model 2 could be less than $11,000. According to many sources, the cheapest car sold in the U.S right now is the 2021 Chevrolet Spark. The Spark is priced at $14,395 for the base model LS.

Impacts of these Incentives

Many of these incentives have income and eligibility requirements. One of the incentives listed above applies to all California residents. The last three incentives appear to have income
requirements attached. This means that the dollar amount listed for them will likely not apply to every single car buyer. The incentives are likely to be bigger than the numbers listed for lower income car buyers. At first Tesla was a car that was priced for people who were making at least six figures for their yearly income. Now the Model 3 has come out, and that has expanded who can afford a Tesla to even more people.

More impacts

These incentives are topped off with $4,300 worth of savings on fuel over six years. If these incentives kick in, entry level Tesla’s will become perennial top sellers. What's more, there will be many people who will be able to afford a Tesla who previously could not.

Conclusion

EV incentives and particularly Tesla incentives are nothing new. They’ve been going on for years. The information that was just released shows how more incentives are being added on, especially in states like California. If a few more incentives are added, then the car will be close to being given away for free.

Check out this article about how Tesla is on a hiring blitz for their Austin Gigafactory. It is inevitable the Model 2 will be produced in one of these new Gigafactories.

Image: Vince Burlapp

Daniel Cappo reports Tesla developments at Torque News. He has had a passion for cars ever since age five when his grandparents let him drive their old golf cart around their property in Upstate NY. He has attended numerous auto shows, and even got the chance to drive a Ferrari California on the track. Ever since Tesla opened up a dealership at his local mall, he's been an avid follower of their cars and technology. Dan has a B.S. in Public Communication from U Vermont. Follow Daniel on Twitter and LinkedIn for daily Tesla News.