Checked sizes. Bumper to bumper sizes, the model Y is about the same size as a Toyota Highlander.
A nicely equipped new Highlander can be had for between 40 and 45 k in Florida.
A Model Y long range is 52k.
Call it a 12k difference. The Highlander gets about 25 miles to the gallon. So, 12,000 dollars will buy about 4000 gallons of gas. so it will run with no energy input cost (at 3 dollars a gallon for gasoline which is typical in the pan handle of Florida now) for about a 100,000 miles.
While I expect the driving experience to be much better in the Tesla, the Toyota while being the same length as the Tesla has a larger interior. So, over a huge population of people, about the same. Noting that everyone has a different use case.
I mention this not to run down Tesla. Not at all. I own a 2013 Venza. While it is a reliable comfortable car, I dislike the car to the point that I will probably never buy another Toyota.
I mention it because the are both suppose to be quality SUV’s and they are the same size, and while the Toyota has some reputation premium it does not have a “cool” guy factor like Mercedes or BMW or Cadillac.
At this time, the model Y will only be competitive with a rebate (if it is even eligible under Inflation Reduction Act) and in high fuel cost low electrical cost areas. This again is not a hit against Tesla business model either now or in the future.
Tesla could probably sell every car it could build in just those areas this year.
Why not in the future?
The 80kw battery pack probably cost Tesla a little under 100 dollars a kilowatt hour to put into the car at the factory. (I know this is a lot less than a replacement battery pack, such is life. Try buying a factory crate engine with all of its accessories, that would be a owie!) That works out to 8,000 dollars for the battery pack. This does not include the 10k or so that I have calculated that all car companies will need to spend per car to build out enough battery manufacturing to produce all cars as EV’s. I do not foresee this happening in less than 5 years.
I mention these things because we can reasonably expect, based on simple inductive reasoning, that it will cost Tesla about 4k to produce that same battery pack in 2026. This shaves more than 4k off the price of the car as that battery pack is carrying a 30 percent mark up. In other words, excluding slowing down of battery plant build out, excluding gains in other aspects of building a model Y, the relative cost for a model y will have dropped to within 6k of a Highlander by 2026. Moreover, I do expect battery factories to get less expensive, I do expect that there will be gains in building controllers, motors, frames and interiors of the model y buy 2026. I expect these gains to be in excess of 4k at the factory floor and with a 30 percent margin we can expect another 6 price drop relative to a Highlander by 2026. This thought exercise leads me to believe that at least in this instance, Tesla will be able to compete for the plain Jane (or Wendy) dollar by 2026 and retain its margins.
Of course nothing is straight forward. A Tesla is not a Toyota.
I want to reiterate, while on absolute practical basis, the Model Y does not get the nod in 2023, the time is coming soon when it will. My prediction several years ago was that a full EV and full ICE sitting side by side on a dealer lot would be priced about the same without government incentives.
Also, I have no idea if Tesla is a good investment. I hold no Tesla stock. I do think that a Tesla model Y and the manufacturing methods of a Tesla model Y is a good proxy for a common household vehicle in 2025 or 2026.