If the base Model 3 RWD was already somewhat perplexing in Tesla’s American lineup, it has now become entirely impractical thanks to President Biden’s newly implemented tariffs on Chinese electric vehicles and components.
Earlier this year, the White House announced a significant increase in tariffs on electric vehicles and parts imported from China, effective September 27. The drastic surge from 25% to 100% on EVs may seem largely symbolic, given the absence of Chinese-made EVs in the US market. However, the real impact is felt in the components sector, notably lithium cell imports, whose tariffs have jumped from 7.5% to 25%. This move has created ripples across the automotive industry, including for Tesla.
As a result, Tesla has discontinued the base Model 3 RWD, previously its most affordable vehicle. Despite being the cheapest Tesla by MSRP, its actual cost often surpassed that of the RWD Model 3 Long Range trim. The base Model 3 RWD utilized iron phosphate LFP batteries from CATL, the world’s leading battery manufacturer based in China. Due to the new tariffs, this model no longer qualifies for the federal tax credit.
In contrast, the reintroduced Tesla Model 3 LR RWD comes with a battery pack that makes it eligible for the full $7,500 federal tax credit, reducing its price from $42,490 to an appealing $34,990. This adjustment positions it as the new de facto cheapest Tesla available.
Moreover, with the Model 3 LR RWD offering a substantial 363-mile range, it’s the most range-efficient option Tesla has on the market. Though the price difference with the base Model Y RWD is now just $2,500, which may sway some buyers towards the more popular Model Y, the revamped Model 3 aligns the automaker’s lineup more evenly.
In summary, while the base Model 3 RWD may have bowed out due to economic pressures, Tesla’s strategic shifts have poised the Model 3 Long Range RWD to capture the spotlight, combining affordability with impressive range and eligibility for federal incentives.
