‍Tesla Prices Are Dramatically Higher Than The Industry’s Average Transaction Prices

Contrary to what the pro-Tesla media has said, Tesla's average transaction costs are significantly more than the average transaction price for the whole auto industry, and the entry price for the Model 3 is far higher than that of typical midsize cars. Moreover, Tesla's average purchase price exceeds the average transaction price for all-electric vehicles.

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The automotive and general media have made pricing statements over the past several months that give the impression that Tesla's latest price modifications have lowered the brand's overall averages to a level below the industry average transaction price for automobiles. That is untrue and simple to refute.

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KBB/Cox Automotive has been tracking new vehicle sales average transaction prices, called ATP, in America for 13 years. The data KBB/Cox provides in its free-to-access press releases is not exact, but the values the company uses are obtained in a very consistent manner, according to Mark Schirmer, Director of Corporate Communications at Cox Automotive, with whom Torque News spoke at length on the topic.

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A Tesla Has Never Been More Affordable?

It seems obvious that this is not the cheapest time to buy a Tesla, given that its least expensive product is now priced in the mid-$30s, according to a Bloomberg article that begins, "It's never been this cheap to buy a Tesla." However, on July 9th, 2017, the same publication called the newly-introduced Tesla Model 3 a "$35,000 electric game-changer." 

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Comparing Tesla ATPs to New Vehicle Average Transaction Costs

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The average transaction price for a new automobile in February 2023 was $44,206, according to KBB/Cox Automotive. Car refers to a sedan or coupe. Because it is a sedan, the Tesla Model 3 qualifies as a car. Both the Toyota Camry and the Hyundai Elantra are automobiles. It is important to distinguish ATPs from vehicles, which include SUVs and pickup trucks while talking about ATPs.

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When talking about ATPs, terminology matters. Simple: All three of the most recent full-size pickup vehicles that Torque News examined had sticker prices that were close to $80,000. Average automobiles cost far less, though. All automobiles in America are included in the total ATP, not simply the category of affordable cars.

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To emphasize the point that Tesla prices undercut something, the author of the piece with the large, catchy headline uses the word "Car" in the headline but changes it to the word "Vehicle" in the second paragraph.

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Tesla Costs and ATP for Automobiles

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No Tesla car is offered with a starting price less than the $44,206 ATP for autos. So how can Tesla be $5,000 cheaper than the "average ATP for cars"? Absolutely not.
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The rationale employed to generate the appearance that "Tesla Undercuts Average American Vehicle by Over $5,000" is as follows: the story's authors discovered Tesla's lowest conceivable product. They then artificially reduced its price by omitting the destination and ordering costs that are included in the ATP of a certain model. They then compared the average ATP of all cars to this fictitious lowest-cost Tesla Model 3 sedan (including trucks and SUVs). According to KBB/Cox, the average ATP in America for all automobiles combined in February, when these strange reports began to surface, was $49,388.

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The starting price of the cheapest car Tesla announced for sale in February was $44,630. Therefore the assertion that the price is $5,000 less than the typical "Car". There are several issues with this.

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To begin, the comparison is between two separate values. The average price paid by the buyer at the moment of purchase is referred to as ATP. It is not the beginning price of a particular brand or model. Average transaction costs have little connection with the lowest basic trim pricing. The real average price paid by the consumer within a certain model or brand is the average transaction price. Tesla Model 3 vehicles start at around $44,630 and may cost well over $73,000. The ATP for the Model 3 car is somewhere in the middle of these figures, most likely in the high $50,000s. It cannot be $44,630 by definition.

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