Tesla lowers model 3 price to $ 35,000

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Tesla announced that it will begin selling a version of its model 3 in the US at a price of $ 35,000, finally fulfilling a promise made more than two years ago.

To make the price lower "financially sustainable," the company said it was shifting to a sales model only online.

The electric car company has announced the model 3 in 2016 as an alternative to its luxury offerings.

However, recently, in September, the average sale price exceeded $ 50,000.

The closure of the physical stores will allow the company to cut costs by about 5 percent, saving it by cutting prices across its entire line of vehicles, Chief Executive Elon Musk said.

He declined to say how many people will lose their jobs as a result of the move, but said change is needed as Tesla works toward its larger goal of making electric cars common.

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Insanely difficult & # 39;

Tesla has announced thousands of job cuts since June, while trying to balance its books after years of losses.

Model 3 strong sales are critical to this effort.

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More than 400,000 customers signed up for the car when it was first announced, but production problems, higher prices and other delays caused problems after its launch.

Last year the company shrunk the model 3 battery, adjusted its manufacturing process, and reduced costs in other ways to reach the lowest price while protecting profit margins.

The company made a profit in the last two quarters of 2018 but expects to see a loss in the first three months of this year, Musk said.

"It was insanely difficult," Musk said, referring to a promise of $ 35,000.

Analysis: Dave Lee, BBC technology reporter North America, San Francisco

If you ever wondered how these huge Tesla stores in upscale malls make money, they do not. At least they do not earn enough money for Tesla to keep them all open if they also want to be able to afford the $ 35,000 car that their investors (and many customers) are desperately waiting for since it was announced. March 2016.

The hope is that this is the car that brings a Tesla to the accessibility zone for a new type of customer. It's still an incredibly expensive car for almost all of us, but for a luxury electric vehicle this is new. The Tesla brand, and its increased production capacity, makes it likely that cheap (a) Model 3 will become a popular proposition.

But Tesla's admission would not have, as previously said, a profit this quarter, scared the investors. Just as admitting that you need to fire workers and reduce their physical and physical presence to fulfill a long-standing promise is a cause for concern.

Along with his SEC difficulties hovering above, Mr. Musk did not exactly lose the confidence of his investors, but he also did not fill them exactly with that.

Delivering a car for $ 35,000 – about the average cost of a new vehicle in the US – is a "potential game changer" for Tesla's growth, said Daniel Ives, managing director of Wedbush Securities.

"While there are still issues that need to be answered around logistics and delivery … we believe this strategic shift was the right move at the right time for Tesla," he wrote in a statement.

The model 3 electric car has a range of 220 miles, a top speed of 130 mph and 0-60 mph acceleration of 5.6 seconds.

The Tesla website said the cars ordered would now be ready for delivery in two to four weeks. However, customers with orders already in the queue will have priority, which may delay some deliveries by June, Musk said.

Musk said he was not worried that a move to online sales alone would put customers away.

The company already has a much smaller physical presence in the US than most car companies, which work with dealerships. The company said it would also provide full refunds for cars returned within seven days.

The lowest-priced model is expected to be available for orders in Europe and China in three to six months, he said.