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How We'd Spec It: 2023 Tesla Model 3

Low prices and new EV tax credits make the Tesla Model 3 a much better bargain

2023 Tesla Model 3 Performance front-quarter view
  • Tesla once again qualifies for the electric vehicle federal income tax credit.
  • The automaker dropped prices to make sure the Model 3 meets the requirements.
  • New rules coming in March 2023 could change the Model 3’s eligibility.
  • Find out which versions of the 2023 Tesla Model 3 we recommend.

Tesla recently dropped the price of the 2023 Model 3 sedan, sparking a buying frenzy among electric-car shoppers. Due to the passage of the Inflation Reduction Act last summer, Tesla models once again qualify for the electric vehicle federal income tax credit, and the Model 3’s eligibility kicked in on January 1, 2023.

But here’s the kicker.

Under the new rules, electric cars must cost less than $55,000, and electric SUVs must window-sticker for less than $80,000 to claim the tax credit. Not only that, but EV buyers must also fall below certain income thresholds. And people are rushing to buy Teslas right now because added restrictions related to the sourcing of EV battery materials could impact their eligibility soon.

Confused? For more details, read the Edmunds guide to the new EV tax credit rules.

But if you've done the math and decided that the Model 3 is right for you, here's where we think you should start

The recommended spec

2023 Tesla Model 3 interior

The Tesla Model 3 that Edmunds recommends is the Long Range model. It has a powerful dual-motor electric all-wheel-drive system, supplies an EPA-estimated 358 miles of driving range on a full battery pack, and zooms from a standstill to 60 mph in a claimed 4.2 seconds. Options include extra-cost paint, bigger wheels, a white-over-black interior, Enhanced Autopilot, and the confusingly named Full Self-Driving Capability feature, which does not deliver full self-driving.

So, how would we spec this model? Unfortunately, we can’t say. The Model 3 Long Range is unavailable to order at the moment, so custom-ordering one is not possible. But if you don’t mind getting a used one, you can find them through Tesla or by searching used Tesla inventory on our website. Just don’t expect to take advantage of the new used EV federal tax credit of up to $4,000, which applies only to models priced under $25,000.

The worthy alternative

2023 Tesla Model 3 rear

Since you can’t get a Model 3 Long Range, you might consider going with the standard Model 3. It has a single-motor electric drive system powering the rear wheels, offers an EPA-estimated 272 miles of driving range, and accelerates to 60 mph more than a second faster than a new Honda Civic Si.

While it’s true the standard Model 3 won’t push you deep into the seat with its acceleration, it also won’t lighten your wallet as much as the Long Range. As we write this article, the base price is $43,990 plus a destination charge of $1,390 and an order fee of $250. That's $9,370 cheaper than the Long Range, though the latter does offer faster Supercharging and a premium audio system.

We would get the Deep Blue Metallic paint, the 19-inch wheels and Enhanced Autopilot, bringing the total tally to $54,130. And then we’d claim our tax credit of $7,500, thank you very much.

The emotional choice

2023 Tesla Model 3 front

There is another potential path to Tesla 3 ownership nirvana. The Performance trim’s base price is $53,990. Skip all of the options and, according to Tesla, the Model 3 Performance still qualifies for the tax credit even though the destination charge and order fee push your total outlay to $55,630.

The dual-motor AWD system in the 2023 Tesla Model 3 Performance screams the car to 60 mph in 3.1 seconds. This version comes with a sport-tuned suspension, performance brakes, great-looking 20-inch wheels wrapped in Pirelli P Zero summer tires, a carbon-fiber spoiler, and aluminum pedals. After applying for the tax credit, it would be quite a bargain.

Edmunds says

February of 2023 is a good time to buy a Tesla Model 3. New rules governing the electric vehicle federal income tax credit mean any electric car under $55,000 is now eligible, and Tesla dropped the Model 3’s price to ensure it would qualify. So, as long as you meet the income requirements, you can claim the credit on your 2023 taxes.

However, you’d better act fast. In March, another round of new EV tax credit rules go into effect, and it is possible the Model 3 will again lose its eligibility status.