National Post (National Edition)
TESLA TAKING ORDERS FOR ITS CAR FOR THE MASSES.
Will be sold online-only to cut buyers’ cost
FR A NCISCO • Tesla Inc. said on Thursday it would offer a US$35,000 version of its Model 3 sedan with a delivery time of two to four weeks, while closing many of its retail stores worldwide.
The announcement comes nearly two years after CEO Elon Musk promised the car at that price to appeal to the mass market. Tesla said its sales would now be onlineonly around the world and it would close many stores.
“Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about six per cent on average, allowing us to achieve the US$35,000 Model 3 price point earlier than we expected,” Tesla said in a blog on its website.
This is the third time this year that Tesla has lowered the price on the Model 3, which recently started at US$42,900. A U.S. federal tax credit began phasing out for Tesla in January, effectively raising the price of cars by US$3,750.
The new US$35,000 version has a top speed of 209 kilometres per hour and can go from zero to 100 km/h in 5.6 seconds, Tesla said. For US$2,000 more, Tesla offers a version with 386 km of range and a top speed of 225 km/h.
A US$35,000 Model 3 is a major shot in the arm for Tesla during a period of major challenges for the Silicon Valley company and could put to rest concerns among some analysts that demand for Tesla’s vehicles might be constrained in 2019. Besides the Model 3, Tesla is developing a new Model Y SUV for 2020 production, while beginning to build a factory in Shanghai.
Tesla stunned the automotive world after its reservations list for the promised US$35,000 Model 3 ballooned to over half a million orders in 2017. Tesla no longer discloses the number of reservations, but many analysts believe those on the list are still waiting for this cheaper version.
The news comes three days after renewed tensions between Musk and U.S. SEC. The agency petitioned a judge this week to have Tesla’s CEO found in contempt of an October settlement. The SEC accuses Musk of having made material statements about production levels on Twitter without first having them vetted internally.
That settlement between Musk, Tesla and the SEC concerned Musk’s August Twitter post in which he claimed to have “funding secured” to take Tesla private at US$420 per share. As part of the settlement, Musk stepped down from his chairmanship role and he and Tesla agreed to pay US$20 million each in fines. On Friday, Tesla is due to repay a Us$920-million convertible bond. Convertible issues give bondholders the right to trade their debt for equity after shares rise over a certain price. Tesla shares are currently about US$40 below the US$359.87 conversion price.