Tesla Model 3 Is Actually Much Cheaper Than a Toyota Prius

Tesla Model 3 and Toyota Prius

When I read this Twitter thread that a Model 3 was cheaper than a Toyota Prius, I was skeptical. And this is coming from someone who is a Tesla enthusiast. Because, a Toyota Prius is less than $30,000, right? And a Model 3 is over $40,000, right? So, how can it be cheaper?

When looking at the cost of a vehicle, you have many things you can look at such as the out the door price, fuel costs, maintenance, and tax credits. According to Matthew Donegan-Ryan, the Model 3 is cheaper straight out the door, whether you factor in the tax credit, fuel costs, or maintenance in!

An equivalently optioned Toyota Prius costs more out the door in 15 of the major markets that he checked. I don't know how many markets there are, so it's possible there are much more than this, but for purposes of this article, we'll use his 15 markets.

Matthew says that 2 weeks ago, some friends of his were about to have a baby and these friends of his wanted a new, safe, and fuel-efficient car. There were looking at the Model 3 and the Toyota Prius already. Matthew gave them some advice and shared the details of the Model 3 compared to the Prius, and a day later they shared the picture of their new Model 3. Wow, that was fast!

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What the Data Shows

Matthew asked them why they chose the Model 3, and they said that there were many reasons, some of which were:

* Safety
* It's an EV and doesn't use gas
* The Tesla operating system and software (Autopilot)
* Low maintenance
* Performance, such as acceleration
* Comfort
* Storage

An even bigger reason though is that his friends lived in Seattle and the Toyota Prius there is over $10,000 more expensive than the Tesla Model 3 RWD which his friends bought. This seems crazy that a Toyota Prius would be that expensive, and Matthew asked them how this was possible since a Toyota Prius starts around $28,000.

His friends said that by the time you add all the equivalent options that are standard with all Tesla vehicles, you get up to the limited trims. Then you have huge dealer markups. Ah, that makes sense. I've seen some dealer markups for thousands or even tens of thousands of dollars.

Matthew decided to do his comparison of the Model 3 and Prius in 15 major metros and shared the results in this video below:

He asked the Tesla sales rep for the cost of a Model 3 as is with delivery and order fee, and he was told $44,630. That seems right considering the base price is just a couple of thousand dollars less than that, right now. Matthew got a breakdown and was shown that you can buy a Model 3 for $39,917.54 after the $7,500 tax credit. This tax credit could be reduced to $3,750 on April 1, however.

There are other states that offer even more incentives for EVs, like California, that can bring the price of a Model 3 down to $24,389 out the door. That is after all taxes and rebates... Wow. I owe more on my Model 3 RWD right now, even after a hefty down payment.

Here is Matthew's data about the Toyota Prius in 15 major metros:

To determine the price of a Limited Prius in each metro area, I used Toyota's convenient online reservation tool: Smartpath. This provided the OTD price and allowed for a reservation payment. Unfortunately, many dealers opted out of using it and I had to contact some dealers… pic.twitter.com/oBJ7pyNZ3D— Matthew Donegan-Ryan (@MatthewDR) March 21, 2023

The MSRP values are in the high $30K and low $40K. That seems like a lot more than $28K. The average dealer markup was $5,955. That's a lot!

Here is how much the Model 3 was in these same areas:

Here's a breakdown of how much cheaper a #teslamodel3 is in each metro area: pic.twitter.com/FjwXQSanVO— Matthew Donegan-Ryan (@MatthewDR) March 21, 2023

Here is Matthew's final conclusion, which shows that the Model 3 is about $7,904 cheaper when you include the $7,500 tax credit. If you qualify for additional state incentives, the cost can be cheaper by an average of $12,404!

BOTTOM LINE: a Tesla Model 3 is cheaper by an average of $404 WITHOUT ANY FEDERAL OR STATE TAX INCENTIVES. The Model 3 is cheaper by $7,904 with the Federal Tax Credit (max joint income $300k, max head of household filer $225k, all others max income $150k).And if you qualify… pic.twitter.com/DhcHEDUnRa— Matthew Donegan-Ryan (@MatthewDR) March 21, 2023

Do you believe the data shared here that a Model 3 is cheaper than a Toyota Prius?

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Matthew Donegan-Ryan, Screenshot