The long-awaited $35,000 Tesla Model 3 has finally arrived, three years after CEO Elon Musk promised to bring the electric vehicle to market at that price point.
The electric carmaker on Thursday launched a Model 3 at a before-savings price of $35,000. According to the company's website, that price is brought down further to $24,450 when including gasoline savings and incentives. Previously, the he cheapest version of the Model 3 was starting at $42,900.
The Standard Range base model starting at $35,000 offers customers a top speed of 130mph and can accelerate from 0-60mph in 5.6 seconds, the company said. Tesla also now offers a Model 3 Standard Range plus at a starting price of $37,000, which has 240 miles of range, a top speed of 140mph and 0-60mph acceleration in 5.3 seconds.
Tesla also announced that it is shifting sales worldwide to online only to “achieve these prices while remaining financially sustainable.”
“Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected,” the company said in a statement.
“Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers,” the statement continued. “The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla.”
At the same time, Tesla said it would increase the investment in the Tesla service system, with the goal of same-day, if not same-hour service. Moreover, the company guarantees service availability anywhere in any country in which it operates.
Tesla also said on Thursday it would not be profitable in the first quarter.
In addition to launching the $35,000 Model 3, Tesla has also slashed the prices of its higher-end Model S and Model X configurations. The long-range Model S and Model X vehicles now cost $83,000 and $88,000, respectively, down from $96,000 before savings. That makes the long-range Model S just $4,000 more expensive than the base version, despite having a range that's 65 miles longer and a top speed that's 15mph faster.
Meanwhile, both vehicles' Performance version, which decreases their 0-to-60 mph speeds, now cost $13,000 less. Model S Performance is now priced at $99,000 (down from $112,000), while Model X Performance is now priced at $104,000 (down from $117,000). Buyers can also choose to add Ludicrous mode to boost their car's acceleration by 20 percent for $15,000. Previously, the add-on cost $20,000.
Chief Executive Elon Musk’s warning on profit during a conference call with members of the media, contrasted with Tesla’s statements last month that it was expecting a “very small” net profit in the first quarter.
Musk declined to answer a question on what the profit margins of the $35,000 vehicle would be. Gross margins on the car were above 20 percent in the fourth quarter.
However, it is obvious that the margin on the vehicle is going to be very small.
The price cut on the Model 3 comes three days after renewed tensions between Musk and U.S. Securities and Exchange Commission.
The SEC asked a judge Feb. 25 to hold Tesla CEO Elon Musk in contempt for violating the settlement agreement reached with the agency last year. The SEC argued that a tweet sent by Musk on February 19 violated their agreement. Musk is supposed to get approval from Tesla’s board before communicating potentially material information to investors.
A U.S. judge issued an order Feb. 26 that gives Musk until March 11 to explain why he should not be held in contempt for violating a settlement agreement with the SEC.