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Here's How to Decode Tesla's Confusing Pricing

Car and Driver logo Car and Driver 4 days ago Drew Dorian
a passenger bus that is parked on the side of a building: Tesla's pricing can be confusing, so let us walk you through it.© Getty Images Tesla's pricing can be confusing, so let us walk you through it.

As if the car-shopping process wasn't already a huge pain, auto manufacturers are sometimes not completely transparent with pricing on their consumer websites, leading to confusion when buyers finally sit down to do the math. Tesla's online configurator–which often presents a bottom-line price that has already subtracted such as items as federal incentives and projected "fuel savings"–can be confusing and even misleading. Allow us to explain.

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Take, for example, the company's popular and genuinely desirable Model S sedan. The price of the base model is shown on the company's consumer site as $75,500* (note the asterisk) before options. Is that the one you want? That's fine, but you will pay over $10,000 more for that same car when it comes time to sign the paperwork and get the keys.

Here's why: Tesla's consumer site takes the total $86,200 price of that base Model S, then subtracts the $1200 destination charge, the $3750 federal tax credit, and $5500 of estimated gas savings over six years to get to the advertised $75,500 purchase price. Showing the price without the destination fee is a common practice among automakers, and some other electric vehicles are advertised with the tax credit removed from their price, so Tesla isn't alone there.

What is unique in this situation is the estimated fuel savings that is subtracted. Beyond making the actual price of the car opaque, that estimated fuel-savings number is fraught with problems. What if the buyer doesn't keep the car for six years? What if the buyer is cross-shopping the Model S with another EV? Also, the car needs to be charged up in order to be driven, and those electrons aren't free anymore: Tesla stopped offering free lifetime Supercharging last year. To be fair, Tesla's consumer site does provide a complete breakdown of the price, and it does display estimated fuel savings, but the shopper has to expand the page to view it and therefore could potentially miss it.

This issue extends to all Tesla models that are currently on sale. Tesla founder Elon Musk contributed to the confusion last week with a tweet that seemed to indicate the long-awaited $35,000 Model 3 sedan is finally here. It's not. He's getting to that magical $35,000 figure by subtracting the tax credits, fuel savings, and destination charge.

In January, Tesla cut the price of the Model 3 by $2000 and made previously optional equipment standard. The lowest-priced Model 3 as of today is $44,100, not the $34,850 shown on the Tesla website or the "~$35k" indicated in Musk's tweet.

But Tesla continues to work on reducing the price of its models, and we fully expect that the $35,000 Model 3 is still coming. By that, though, we mean a Model 3 variant with a short-range battery and an MSRP of $35,000 before credits and potential fuel savings.

When shopping for a new set of wheels, it's good practice to be as knowledgeable as possible before setting foot in a showroom-or placing an online order, in Tesla's case. When it comes to pricing, this can be difficult. Our recommendations: Pay close attention to the fine print, and do the math for yourself when it comes to fuel savings.

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