Elon Musk's Tesla Model 3 Finally Hits Holy Grail Price Of $35,000

02 March, 2019, 03:28 | Author: Kevin Carter
  • Tesla shares are well below the equity conversion rate

The Silicon Valley electric vehicle maker plans to close most of its stores worldwide and go strictly to internet sales as it tries to cut overhead so it can sell a base Model 3 for $35,000 and still make money.

Previously, the lowest price for a Model 3 in Canada was $58,000, but it seems like Tesla has shaved a few thousand off that price for its new Standard Range Rear-Wheel Drive Model 3 offerings.

The lower price could expand the Model 3 market by about 600,000 cars in the United States alone, based on historical sales figures for similarly priced sedans, Baird analyst Ben Kalo wrote in a note to clients. For an extra $2,000, you can get the "Standard Range Plus", which travels 20 miles further, has a top speed of 140 mph and gets you 0-60 in 5.3 seconds.

Tesla shares fell as more than 6 per cent to less than US$300 in early trading, the biggest drop since mid January. There's also Wi-Fi, Bluetooth and cellular connectivity, voice activated controls and two USB ports for charging your devices.

Although these standard-range Model 3s will ship with all the hardware necessary for Autopilot, it's an extra $3,000 to have this functional before the vehicle is delivered, or $4,000 if you change your mind and want to add it after delivery, which should take place in "three to six months", according to Musk. That, of course, led to increased interest in Tesla's stock, too.

Along with the Model 3 announcement, Tesla said it will also close most of its showrooms around the world and shift sales to online only.

Today's news comes days after Musk teased the announcement on Twitter, leading to considerable speculation about what the company might say.

In a statement released by the company, Tesla announced that the company would be shifting all sales of Tesla vehicles online.

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Some analysts have questioned how a $35,000 version of the vehicle could affect gross margins, which were above 20 percent in the fourth quarter.

Until now, Tesla has concentrated on selling Model 3s with long-range batteries and more equipment, meaning the average price paid was around $50,000 (£38,000).

"In the coming weeks, we will be evaluating all of our sales and marketing organization to understand where there are operational efficiencies, and how best to support the transition to online sales while also continuing to deliver a truly awesome and educational Tesla buying experience".

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

That means the company is shutting down "many of its stores" and keeping a "small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers".

Since unveiling the Model 3 in 2016, Musk has been promising a US$35,000 version.

But Musk has his company following much of the same playbook, and that's asking for similar results.

Autopilot, which is a fancy name for Tesla's semi-autonomous suite of driver assists like adaptive cruise control, will set you back US$3,000 ($4,220).

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