SAN FRANCISCO: Tesla said Thursday its Model 3 – heralded as an electric car for the masses – is available for order online only, at a price of US$35,000 with delivery promised within a month.
The announcement fulfills a vision of Tesla founder and chief Elon Musk, who has touted a more affordable electric car as part of his vision of weaning drivers from gasoline-powered vehicles.
The Model 3 was to be priced at US$35,000 when Tesla first began taking orders in 2016, but the cheapest version before today was about US$10,000 more expensive despite price cuts that followed reductions in the US federal tax credit for vehicles not burning fossil fuels.
Musk described the Model 3 early on as “the final step in the master plan: a mass market, affordable car.”
Not long after Tesla was founded in 2003, Musk said the plan was to use money from high-end electric vehicles to create more affordable offerings to make the technology the new automotive norm.
As it launched its least expensive Tesla, the company said it would sell only via the internet.
“To achieve these prices while remaining financially sustainable, Tesla is shifting sales worldwide to online only,” Tesla said in a statement.
The “standard” Model 3 has a smaller range before recharging, of 220 miles (350 km).
Its specifications include a top speed of 130 miles per hour (208 km per hour) and 0-60 mph acceleration of 5.6 seconds.
“It is built to achieve the same perfect 5-star safety rating as the longer-ranged version,” Tesla said.
Tesla also introduced a Model 3 Standard Range Plus, which offers 240 miles of range, a more powerful drivetrain and premium interior features at a price of US$37,000.
Tesla shares that closed the formal trading day up slightly slid 3% to US$310.20 in after-market trades that followed release of the news.
“The bears will focus on this news as a sign that lower profitability and demand are catalysing this move and strategic pivot, which we strongly disagree with,” Wedbush analyst Daniel Ives said in a note about Tesla to investors.
“We believe this strategic shift was the right move at the right time for Tesla, although the stock will be a ‘prove me’ name for the next 6-9 months.”
Tesla has been under pressure to increase production to show it can operate profitably and at the kind of scale needed to be considered a major auto company.
While reaching the final step of his “master plan” with the Model 3, a standoff between US stock regulators and the flamboyant Musk has taken a dramatic turn over a tweet that could cost the entrepreneur his job at Tesla.
Musk, 47, who also heads SpaceX, is a visionary and inventive boss but is also highly unpredictable, especially on social network Twitter where he often communicates in defiance of rules imposed on executives of publicly-traded companies.
The Securities and Exchange Commission (SEC) this week accused him of violating the terms of a court-endorsed deal between him and the regulatory agency stating that he should avoid sending any tweet that could affect the price of Tesla shares.
On February 19, he tweeted that Tesla would make 500,000 cars in 2019 – up from the 400,000 that the company had estimated until then, as it grapples with Model 3 production problems.
Musk corrected himself four hours later, saying that Tesla would indeed produce about 400,000 cars this year: “Meant to say annualised production rate at end of 2019 probably around 500k.”
But that correction was not enough for a federal judge, who gave Musk two weeks to explain why he should be spared from being held in contempt for violating the agreement with the SEC.
Last year, the SEC investigated Tesla and Musk after he tweeted that he planned to take Tesla private and already had the financing to do it – an assertion that proved false but nonetheless made investors who bet against the company lose millions.
To settle fraud charges stemming from the tweet, Musk had to resign as Tesla chairman, both he and the company had to pay a US$20 million fine and the SEC demanded oversight of his social media use.