Tesla cuts price of Model 3 to $35,000 and moves sales online

Jeannie Matthews
March 2, 2019

To save costs on its cheaper Model 3 version, Tesla plans to close most of its 250 stores and sell cars online.

The Model 3's previous starting price as of yesterday was just a bit over $42,000 so this is good for a seven thousand dollar discount.

"Electric vehicles now make up only about 2 per cent of global sales, and while we believe that number is likely to grow, we believe there is an education process that is crucial for new customers around charging, range, and other features that are unique to Tesla that will not be as readily available without the in-store experience".

Tesla has 378 stores worldwide, with 20 stores in the United Kingdom and Ireland - some of which are combined with service centres.

"This is the only way to achieve the savings for this vehicle and be financially sustainable", Musk said. Tesla says to its US buyers, "For 6% more money, you get 9% more range, more power, and an upgraded interior".

The firm said it was shifting to an online-only sales model to make the lower price "financially sustainable", the BBC reported.

The announcement fulfills a vision of Tesla founder and chief Elon Musk, who has touted a more affordable electric auto as part of his vision of weaning drivers from gasoline-powered vehicles. In January it had said it was "optimistic" about being profitable in every quarter of 2019.

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We are unsure as to how potential customers who are new to the brand, or EVs in general, will be able to try before they buy if online purchasing becomes the primary option.

That is particularly true of younger, technologically fluent consumers who already are accustomed to buying nearly everything at Amazon and having it delivered to them quickly, said Karl Brauer, executive publisher of Kelley Blue Book. Once Full Self-Driving is activated, Musk estimates that it will still take a few billion miles of actual, real-world driving to make it totally reliable. Many customers have complained on social media and online forums of long waits for parts and repairs on their vehicles.

Tesla delivered news Thursday that many consumers have long awaited: The automaker is finally offering a version of the Tesla 3 sedan priced at $35,000. Regulatory filings show that the company has $920 million in convertible senior notes due on March 1 at a conversion price of $359.87 per share; Tesla's shares haven't traded above $359 for quite some time and closed at $297.86 on Tuesday making repayment through shares impossible. This is a significant milestone for Tesla, the culmination of years of hard work by employees across the company, and something of which you should all be very proud. But Musk said it's "likely" Tesla will bounce back with a profit during the April-June period. The company's stock fell 3.6 percent in after-hours trading.

The news comes three days after renewed tensions between Musk and US Securities and Exchange Commission (SEC).

The SEC complaint alleges Musk picked the $420 price point because "he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it amusing, which admittedly is not a great reason to pick a price".

Tesla claimed the tweet was based on public information, made available in the company's earnings transcript, which states the volume would be between 350,000 and 500,000 cars.

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