Tesla Motors (TSLA) Model 3 Attracts VW Diesel Settlement Funds

Tesla Motors Inc (TSLA) Model 3

Tesla Motors Inc Model 3 – the less expensive electric car – is expected to be delivered next year, and it is already attracting hundreds of thousands of drivers. VW diesel car owners have been considering options under the settlement plan the auto maker submitted in June, but some have already put the $1,000 deposit for the Model 3 with the intention of using the money from Volkswagen’s proposed vehicle buyback program to help buy the Model 3, says a report from Market Watch.

Elon Musk at Tesla Motors Inc (TSLA) Model 3 Unveil

VW drivers – Why they could go for other brand?

Owners of about 475,000 diesel cars can sell their car back to Volkswagen under the proposed plan. They can sell their car for its value before the emissions scandal was publicized, or have the car fixed to comply with the federal emissions regulations. An additional cash payment between $5,100 and $10,000 will be included in either option based on the pre-scandal value of the vehicle. As per the automaker, the plan will be up for approval on July 26.

The settlement came after the automaker’s admission in September of fitting around 11m diesel cars world-wide with a “defeat device” to cheat federal emissions tests. Owner of VW diesel cars have voiced mixed opinions about the plan. Some believe the plan did not go far enough while some consider the plan to be generous. But many said they would not buy another VW car in the near future as the automaker lied to them about the environmental impact of the cars. However, the question that arises is – Which car will replace the Volkswagen?

Why Model 3 is the best option for VW owners?

Jessica Caldwell – director of industry analysis at Edmunds.com. – says Subaru and Mazdas are natural substitutes of VW as they are affordable cars with good performance and good fuel efficiency. For owners who care about those features plus environmental impact, and are willing to pay some more money, the Model 3 fits well.

Caldwell says, “The Tesla Model 3 does make sense.” Both the VW diesel cars and Tesla Motors Inc Model 3 are positioned “as cool environmentally friendly alternatives to cars like the Prius.”

An analyst at Kelley Blue Book says the Model 3 would be a move upmarket for several VW drivers, who could get between $12,500 and $33,000 in buybacks. Tesla Motors Inc introduced the Model 3 in March, and is expected to start deliveries at the end of 2017. The automaker has received around 375,000 reservations already for the electric car as of May 15. The Model 3 is priced at $35,000.

At 9.35 am EDT, Tesla shares were down 0.42% at $220.59. Year to date, the stock is down almost 7% while in the last one-year, it is down almost 16%. The stock has a 52-week high of $286.65 and a 52-week low of $141.05.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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