The standard version of the Model 3 retails for $35,000, representing a considerable price drop from Tesla's previous models.
That price is supposed to make the Model 3 attractive to car buyers who might not have previously considered themselves in the market for an EV. But consumers quickly discovered that $35,000 does not buy a fully-loaded Tesla. As with other car manufacturers, Tesla offers a lot of options that drive up the final price.
Anyone wanting a color other than black or a longer-range battery or autopilot features has to pay significantly more than $35,000.
The cost of next-gen vehicles, whether they be electric, autonomous, or both, is one of the biggest hurdles for an industry looking to get over a hump. And it's not a hurdle that's going away anytime soon. In an interview with Axios, Alex Russell, CEO of Lidar development company Luminar, noted that autonomous vehicles will fetch some awfully high prices when they're initially introduced to the consumer market.
"Most of the attention is on bringing down the price of Lidar to $1,000, or even $100, so that self-driving can be embraced by the mass market," according to the article.
"Current top-of-the-line Lidar -- those boxes you see on top of test cars tooling around big cities -- cost $75,000 to $85,000. When the technology is optimized, the price will initially be $300,000 to $400,000 -- the price that fleet owners will be willing to pay because of how profitable ride-hailing will be as a business," Russell said.
Lidar is the laser technology that most autonomous vehicles use to detect their surroundings.
Using millions of lasers, Lidar sensors give autonomous vehicle software a blueprint to construct a three-dimensional map of the car's immediate environment, which it then uses to maneuver itself through traffic. The most recognizable form that Lidar takes is in the coffee can-shaped device on top of self-driving cars designed by Waymo and others.
While Russell appears to be the first to predict such a hefty price tag for consumer self-driving cars, he is far from the first to point out that the current state of Lidar technology needs to evolve considerably for autonomous vehicles to take the road. As of now, most experts consider the state of the tech to be insufficient to guide autonomous vehicles at highway speeds. Further, even the technology that is currently available would be prohibitively expensive to equip entire fleets at scale.
"Low-speed applications may be more affordable more quickly than higher-speed ones," Oxbotica CEO Graeme Smith told the MIT Technology Review. "If you want a laser that's operating over 250 meters, you need a finely calibrated laser. If you're working in a lower-speed environment and can get by with 15 meters' range, then you can afford [to use] a much lower-cost sensor."
At only 22, Russell is not a typical automotive CEO. With $36 million in fundraising, Luminar has become a legit player and figures to be one of the companies, if not the company, that pushes Lidar technology where it needs to go. That, not cost, is his greatest concern.
"The biggest question is not cost, but who is going to get there first," he told Axios.
While that may be true, cost is certainly going to play an important role in helping self-driving cars reach a tipping point. And since most people don't have a quarter of a million bucks to drop on a new car, no matter how advanced its technology, the sector is going to have to find cheaper alternatives that don't compromise on quality or safety in order to succeed.