Following a week of rumors, Tesla (NASDAQ: TSLA) has finally revealed that it will be launching a standard Model 3 at a price of $35,000 USD.
This is big news for the growing company. Tesla has previously shied away from affordable models of their vehicles, citing profit concerns. With the Model 3 brand now well established in the American market, the company believes the time is right for a stripped-down version.
The more affordable car will come with some feature and performance compromises to keep costs down.
Elon Musk Believes the New Tesla Has a Unique Position in the Market
Tesla has been promising a more affordable Model 3 since 2016. Investors and car enthusiasts have waited, sometimes impatiently, for the company to make good on that promise.
CEO Elon Musk said on Thursday that the entry-level Model 3 will have a better interior than originally expected. He also noted that the standard price doesn’t take any tax credits into account.
Musk believes that tax benefits and lower operating costs give Tesla a unique position in the market. On a conference call, the CEO said that “From the beginning, this has been the goal. It’s an incredible car, and at $35,000 there are still some pretty significant consumer tax credits that can be had.”
The New Model 3 is Slower but Still Impressive
Performance changes to the new Model 3 will keep production costs down by reducing the materials and technology used in the vehicle.
- The existing Model 3 has a range of 325 miles and can accelerate from 0 – 60 mph in 3.2 seconds. That’s supercar territory.
- The new base Model 3 will have a reduced range of 220 miles and will accelerate from 0 – 60 mph in 5.6 seconds.
Both range and acceleration are still very impressive, and comparable with high-performance gasoline sports cars. This will keep automotive enthusiasts happy.
The New Model 3 is Already Available to Purchase Online
Musk also announced Tesla’s new sales model. He told the media that “you can buy your car on your phone in about one minute in the U.S. We will still have stores, but they will be converted to galleries and information centers.”
This should reduce overheads and provide a smoother experience for buyers.
Tesla investors are likely to respond positively to the news. Stock is down -3.88% year to date but has rallied this week, growing 8.58% over the last five days. This latest announcement has the potential to carry confidence into next week and beyond.
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