Tesla is finally delivering on its promise that it made about two years back. The EV maker promised a $35000 Model 3 for the masses, and the same is now available for order online.
$35,000 Model 3 – what do you get?
Tesla announced Model 3 in 2016, but as of September, its average selling price was over $50,000. The company so far focused only on producing higher-trim versions to boost its profit margins. This will change going forward.
On Thursday, Tesla introduced the base Model 3 variant featuring a single electric motor, standard interior and an estimated range of 220 miles. The standard interior in the $35,000 Model 3 includes heated, cloth seats with manual adjustment, “basic audio,” standard maps and navigation along with a center console with four USB ports.
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“Although lower in cost, it is built to achieve the same perfect 5-star safety rating as the longer-ranged version, which has the lowest probability of injury of any car ever tested by the U.S. Government,” Tesla said in a press release.
By paying $2000 more, you can get a “partial premium interior.” This “partial premium interior” offers different upholstery, power-adjustable and heated front seats, LED fog lights, upgraded audio and phone docking. Also, paying for this interior, upgrades you to the “standard range plus” car with an estimated range of 240 miles.
Paying $5000 over the base model price gets you a “premium interior” with satellite-view maps with traffic information, internet browser, in-car music streaming, heated front and rear seats and more powerful audio system. This variant, called “midrange,” costs $40,000 and offers an estimated range of 264 miles. One can also get the same environment in the 325-mile “long-range” version which costs $43,000.
Also, the base model is available only in black, but you can upgrade to premium paint by paying $1500.
Tesla ditches offline sales
During the conference call, Tesla CEO Elon Musk also made another big announcement. Musk said that the company will cease all its retail sales and sell vehicles online only. The CEO said ending offline sales will result in significant cost savings and make the lower price “financially sustainable.”
Musk added that ditching the physical stores will help the company to cut costs by 6%. Tesla will use this savings to reduce the price of the vehicles. Musk did not reveal how many stores will be closed or how many people will lose their jobs. The CEO, however, admitted that it is a needed change and will help Tesla achieve its bigger goal of making electric cars mainstream. Tesla plans to keep some stores open in high-traffic areas, but mostly as galleries, showcases and information centers.
Such a move suggests that the EV maker is not concerned about a reduced presence due to online-only sales. Tesla already enjoys a smaller presence in the U.S. than the traditional automakers that operate via dealerships.
Strong Model 3 sales – why is it important for Tesla?
Tesla has announced thousands of layoffs since June in an effort to better its financial shape after years of losses. Though the company managed to post a profit in the last two quarters of 2018, it expects a loss for the current quarter. Now, the company desperately needs strong Model 3 sales to improve its financials further.
Daniel Ives of Wedbush Securities believes that offering a $35,000 car could prove a potential “game changer” for Tesla’s growth.
“While there are still questions that need to be answered around logistics and delivery … we believe this strategic shift was the right move at the right time for Tesla,” the analyst said in a note, according to the BBC.
Over 400,000 buyers signed up for Model 3, when it was first announced. However, the launch was delayed several times owing to production issues. Over the last year or so, Tesla has worked hard to deliver on its promise of delivering a $35,000 Model 3. The company reduced the battery, altered the production process and resorted to other ways to lower costs.
“It has been insanely difficult,” Musk said referring to Tesla’s promise to deliver a $35,000 car.
Talking of the delivery time, Tesla’s website says a car ordered now will be ready for delivery in two to four weeks. However, priority will be given to those already in the queue. Clearing up things, Tesla CEO Elon Musk said that someone ordering the $35,000 Model 3 on Thursday (Feb. 28) could expect delivery by June.
Tesla said that it would give a full refund for cars returned within seven days (or 1,000 miles). The lower-priced Model 3 could be made available for order in Europe and China in about three to six months.