Tesla's chart of total cost of ownership from 2021 Impact Report Tesla However, this report is for the Model 3 at a similar price, and without the federal $7500 tax credit. (The price in 2021 ranged from $39K to $43K by the end of the year when the report was written.) Some components of insurance do vary with the value of the car as well. So we can roughly say that about 66% of the TCO after rebates is based on the cost of the car, though different cars may depreciate at different rates so we can’t be exact. As such a rough back-of-envelope calculation suggests that for TCO to drop to 71% we will see the after-credit price be 60.5% of the Model 3 after-credit price, and thus should see a sticker price of the car around $29,000 — a bit above the commonly suggested $25K price. (Update: This article previously estimated via a different calculation at around $26,000 but the $29K figure is probably more accurate due to the effect of credits. If Tesla has used state credits in their calculation this would alter it further.) Of course, when you knock $7,500 in federal credits and state credits — $2,000 in California and up to $5,000 in Colorado — you’re looking at $16,700 plus fees out the door in Colorado for a new Tesla economy model. A model which also costs you half as much to operate. It’s hard to see any cost-conscious entry level car buyer going for today’s gasoline car prices. Of course, while Tesla forecast a price of $35,000 for the Model 3, it didn’t really deliver on that, offering a car at that price for only a short time. (It’s also possible Tesla has made their chart above with the Model 3 having no incentives and the new model getting all of them, but that would be strange.) So it’s possible that the cost forecast in their chart above will not be delivered on. But anything in this range will be game changing. How good a car? At this price, it’s going to suck, right? After all, the base Chevy Bolt is below this price range, but doesn’t compare to a Model 3, which far outsells it even at a much higher price. The new car may not have the 270 mile range of a Model 3, but it probably will be close, using LFP batteries which have a very long life, and with which you can more easily use the full 100% of the range. With Lithium Nickel batteries found in the higher end cars, you try to only rarely charge the car up to 100%, though you can do it if you need it. With fast chargers every 50 miles on main highways, and charging at home, the extra range may matter less in this class of car. All through the presentation, Tesla emphasized their manufacturing philosophy — make it cheaper and better at the same time. They have not always delivered on that — for example when they removed ultrasonic sensors to save cost they took out parking assist — but they claim it will return soon. All of Tesla’s efforts are to make the car a computer. The more of the car that is a computer, the more it runs on the economics of electronics — which means getting better and cheaper at the same time, and not just a little, but by leaps and bounds. Tesla is also applying this Silicon Valley philosophy to its manufacturing and design, and seems to be pulling it off. At the top, you can also see how they predict they will make the entire power train of this car for around $1,000. At that price, plus battery pack, they may be able to make cars that are much cheaper than $29,000 for special needs. We can predict Tesla’s new model will actually not be much worse than the original Model 3, and the Model 3 will probably get better to justify its higher price. Some things will get a bit cheaper, especially things Tesla doesn’t make, like upholstery, finish, tires and maybe sound deadening. It won’t feel like a luxury interior, but you won’t expect it to. The shape will remain similar, as required by physics. If it is not available in two-motor 4WD, the space of the front motor will make up for storage lost to that in the Model 3. You’ll have a similar screen — perhaps a bit smaller — and a similar clean dashboard. They will probably remove more physical buttons, and motorized seat adjustments on the passenger seat — but in general they prefer anything that can get software control and be made in quality. You probably won’t get a transmission stalk, which they already took out of the high end cars. They may not make it have the same hardware pack they believe will be needed for FSD called HW4 — they may pull some of the cameras, but also leave room to upgrade those later or make these things in a higher trim level to keep the base price low. A lot of the fancy features will be there in software. Software doesn’t cost anything to reproduce, but it costs money to write. Tesla plans to make money in its more expensive cars by giving you fancier software, not fancier hardware. Today, you can pay $500 or $2500 for different laptop computers, of $200 or $1,000 for different phones. Those devices don’t differ in capability by the 5:1 ratio, in fact in many cases the cheaper device does a large fraction of what the fancy one does. Tesla will make cars work like that too. Think Apple, which sells the same hardware as others for higher prices by making the software that customers want more. Of course, the greatly superior charging network will work for you no matter what Tesla model you buy, and right now it’s one of the prime reasons to buy a Tesla. What about the van?