Tesla's greatest marking victory is convincing people this is true. There are many worthy discussions on maintenance and fuel costs, but comparing the $35k base model price for the Model 3: Ford's top end car is the Taurus starting at $27k. The only model higher than $35k is the Expedition. One could buy two Fiestas or two Focuses for $35k. Mazda's entire line is less than $35k (though they don't currently show a price for the CX-9, their SUVan). One could buy two Mazda 3s for $35k. Subaru's entire line maxes out at $26.5k for a WRX or Crosstrek hybrid. Two Imprezas would run $36.5k. Honda's entire line is also below $35k. Two Fits would run less than $32k. Toyota finally gets into the $35k range with the Avalon... oh this is the hybrid, for $36k. The gas one is their top-of-the-line car for $32.5k. The Prius C starts at $20k, or one could get two Yarises or two Corollas for $35k. I think I'm looking in the wrong place. BMW starts around $33k for a 2 or 3 series. A Mercedes C class starts at $39k. Cadillac starts at $33k for the ATS sedan. Audi starts at $31k with the A3. Lexus starts at $37k with the IS. Tesla is still catering to a luxury crowd. It's still people who want to impress their neighbors. With a BMW comparison, they've moved down from where a 7 series would impress people to where a 3 series does. Around me, "normal" ranges from about a base model Honda Civic up to a nicely equipped Accord.This is their Tesla for normal people
I'm on my phone and about to head into work, so I'll have to keep this short. Tesla is selling in the luxury price range, because their cars are more expensive to manufacture. This is because of both the technology of the car as well as volume. They don't actually compare to luxury vehicles. I have sat in a Model S. I've also ridden shotgun in Mercedes, Jaguars, and Lexuses. Teslas are nicer than Civics for example, but they're not Mercedes nice. Also, the $35,000 is normal people price and seems quite reasonable. The Chevy Bolt will sell for near similar price and both the Nissan Leaf and the Ford Focus Electric scratch around $30,000 as well. Tesla is compared to other luxury cars because of their price point. That doesn't mean they're actually luxury cars though. You can get Camaros and Mustangs for $40,000 easily. That doesn't actually make them luxury cars either.
The $7500 federal subsidy is currently limited to 200,000 cars from any one manufacturer, and Wired speculates Tesla will be halfway there by the end of 2016 and closing in on the cap by the time Model 3s start to roll out.
They may be banking on the subsidies but many will be very disappointed. Or they'll be in a position where they could have afforded a series 3 anyway. Subsidies come and go. The solar power industry is going through this now.