Tesla: why the Model Y costs less than the Model 3? “The Model Y will be the best-selling car in the world” according to Elon Musk. Displayed at 49,990 euros in the configurator, 47,990 euros once the bonus has been deducted, the Tesla Model Y Propulsion thwarts the forecasts and comes with a starting price lower than that of the Model 3 sedan. Illogical? Yes ! But there are a few possible explanations…
Since its arrival on the market at the beginning of 2022, the Tesla Model Y has placed itself above the Tesla Model 3. Already in terms of dimensions: +6 cm long, +7 cm wide and +18 cm in height. But also in price since without redoing the history of all the price increases of recent months, it was displayed up to 6,000 euros more than its counterpart in the sedan version depending on the version.
So why since yesterday, you can buy a Tesla Model Y in its brand new entry-level Propulsion version at 49,990 euros (47,990 euros after deducting the bonus) while the Model 3 Propulsion with equivalent characteristics is displayed at from 53,490 euros? The question could also be asked in these terms: why does the cheapest Tesla Model Y cost less than the cheapest Model 3?
Everyone was taken aback by Tesla’s announcement. If we could impute in a trivial way (although probably not completely false) this decision to the unpredictability of a certain Elon Musk, there are undoubtedly much more rational factors which can explain this significant price difference with this which was expected, more like around 56,000 euros. Which then? We take stock.
A CONTEXT WHICH HOWEVER PLAYS AGAINST THE DECLINE
If at Tesla, we are used to the range evolving almost “in real time”, with the arrival of this or that function, or prices that vary, the increase in these is never pleasant. We have thus seen the basic Tesla Model 3 go from 43,800 euros in a few months, excluding the bonus of 7,000 euros at the time, i.e. 36,800 euros, to 53,490 euros currently, and a bonus which is no more than of 2000 euro. Or 51,490 euros, and therefore a difference of 14,690 euros between a customer who bought the model at the start of 2021 and one who has just placed an order.
Elon Musk announced it in July, the price of his models could drop on one condition: that the current inflation calms down. But since that’s not yet the case, that’s not yet what played into the Model Y’s prices.
A PRODUCTION THAT IS MATURING
The Model Y has also undergone increases in recent months on the Long Autonomy and Performance versions. But at the same time, there is a real ramp-up of production in the various Gigafactories around the world. Which logically lowers the price. It is the Gigafactory in Shanghai, China, from which the Model Ys sold in Europe come out, apart from the Performance versions which come from Berlin.
Thus, a few days ago, in this month of August 2022, Tesla announced that one million cars had already been produced in the Giga Shanghai, out of the three million that are already on the roads around the world. The annual capacity of the factory is 750,000 Model 3 and Model Y per year: it is quite simply the largest electric vehicle production factory in the world. For a plant whose construction began at the end of 2018 and which began production of vehicles at the end of 2019, this is impressive! And this is obviously only a step towards global production which will increase further.
Between the Giga Austin (Texas) and the Giga Berlin, which exclusively produce Model Ys, by the end of the year, Tesla could reach the capacity to produce 1 million Model Ys per year.
A SIMPLIFIED PUZZLE
Speaking of production, the surprisingly low price of the Model Y Propulsion could also be explained by the very method of production of the car. And that’s also one of the reasons why Tesla can scale up and produce so quickly: thanks to the Giga Press. This huge machine saves valuable time by manufacturing in a few tens of seconds (80 to 90) the entire rear part of the Model Y.
Where this same part of the chassis would have required the assembly of some 70 different parts before the Giga Press, this mastodon of 400 tons and which can press with a force of more than 5,000 tons can now mold the 100 kilos of aluminum which constitute the rear in one piece. The front of the Model Y is also produced in the same way.
Ne reste plus qu’à assembler ce qui, avec la partie intégrant les batteries, permet de n’avoir que trois pièces de puzzle. Contre 370 avant ! Précisons que la Model 3 n’est pas concernée par cette évolution.
MODEL Y GOES BEFORE MODEL 3
But then, if the ramp-up of the factories would make it possible to lower the price of the Model Y, why not lower that of the Model 3 either? Because very clearly, Elon Musk wants to favor the SUV here over the sedan. He also announced it during a meeting with shareholders last October: “The Model Y will be the best-selling car in the world“.
If it is already the best-selling electric car in the world, the SUV should therefore also soon be at the top of the world hierarchy of the most popular cars on the planet, all engines combined. It is currently the Toyota Corolla which holds this title with just over a million units sold in 2021.
BIG PRICE DIFFERENCES BY COUNTRY
The price of this new Model Y may vary. Strongly. So much so that for some of them, this new entry-level version is logically more expensive than the appeal price of the Model 3 sedan.
It should also be noted that with regard to the Long Autonomy and Performance versions, they are systematically more expensive on the Model Y than on the Model 3, regardless of the country.
In any case, this undermines the possibility that the simple production method of the Model Y with the Giga Press and the increasingly high production rate plays so much on the price of the car.