Tesla Begins Taking Orders for the $35,000 Base Model 3
【Summary】Tesla has opened orders for the long-awaited $35,000 version of the Model 3. Customers can order the car beginning today. Tesla’s website says the $35,000 “standard range” Model 3 would be delivered within 2 to 4 weeks.
Late Tuesday evening, Tesla CEO Elon Musk tweeted a cryptic message to his 25 million followers on his personal Twitter account. One read, "Thursday 2pm" and the other was "California".
Turns out it was a teaser for today's official announcement that Tesla has opened orders for the long-awaited $35,000 version of the Model 3. Customers can order the car beginning today. Tesla's website says the $35,000 "standard range" Model 3 would be delivered within 2 to 4 weeks—and the timing is good.
Since Tesla has finally ramped up production, the Model 3 has become the best selling car in the U.S. The lower priced Model 3 is also key for Tesla to achieve economy of scale, by making the lower priced model in large numbers, production costs per unit fall so Tesla can remain profitable.
While today's announcement will no doubt make those happy that have been waiting for more than 18 months for the car, Tesla was forced to makes some changes remain profitable.
Musk announced that Tesla will only sell cars online, beginning with the lower-priced Model 3. Customer can still visit Tesla's retail location to check out the Model 3 in person, but potential buyers will need to go online to order it.
Just as Henry Ford did 100 years ago with the world's first mass-produced car the Model T, the base Model 3 will only offer one color choice—black. Customer wanting a different color will have to pay up to $2,500 more, which is the cost for red paint.
The lower priced Model 3 will deliver 220 miles of range, a top speed of 130 mph and reach 0-60 mph in 5.6 seconds.
In a blog post, Tesla also highlighted the vehicle's safety. Tesla wrote that the Model 3 "is built to achieve the same perfect 5-star safety rating as the longer-ranged version, which has the lowest probability of injury of any car ever tested by the U.S. Government."
Tesla is also offering a "Partial Premier Interior" for $2,000 more. For the extra cash, buyers get 12-way power adjustable heated front seats, premium seat material and trim, an upgraded audio system and LED fog lamps and other minor upgrades.
Tesla Moving to Online Sales Only
Musk said the company will shift all of its sales online, a cost-cutting measure that will further distance Tesla from the antiquated dealership model that's often stressful for car buyers.
"Worldwide, the only way to buy a Tesla will be online, and you can buy a car on your phone in 1 minute," Musk said on Thursday. "It's 2019, people want to buy things online."
The move will help the company lower vehicle prices by around 6 percent Musk said, but will also result in an undetermined number of layoffs and store closures. Some Tesla stores will transform into "galleries and information centers" open for prospective buyers' questions but not for sales.
Tesla launched it first car the Model S in 2012. However, with a high price tag, the car was not affordable for most people. Musk often said that Tesla would offer high end cars at first, before introducing a lower-priced model. Musk said making affordably priced family cars was Tesla's "secret master plan" to turning a profit and weaning the world off fossil fuels.
The Model 3
Tesla made headlines when it announced the $35,000 Model 3 in March 2016. After opening up reservations for the electric car, over 400,000 people put down $1,000 deposits to get on the waiting list. Many of them hoping to get the $35,000 version, which hasn't been available until now.
Tesla also struggled with production delays what Musk described as "production hell", which delayed the launch of the $35,000 Model 3. Tesla's goal was to built at least 5,000 Model 3's per week at its Fremont, California assembly plant.
In June of 2018, Tesla announced it had finally reached its goal of building close to 6,000 Model 3's at the end of June. However all of the cars built were higher priced versions, frustrating reservations waiting over two years for the lower priced model. Many people cancelled their orders as a result.
At the time, Musk said Tesla was not in the financial position to start selling cars for $35,000.
Musk tweeted in May 2018 that selling the car for $35,000 would "cause Tesla to lose money & die."
Tesla has worked to speed up the Model 3′s production and delivery, including by rerouting the production lines of its other more expensive models. The company even set up a temporary tent in the Tesla factory parking lot in an effort to boost production.
Tesla said it delivered more than 90,000 vehicles in the last quarter of 2018, three times as many as it delivered in the same period in 2017, but that it must reach more customers who can afford its cars if it wants to grow and compete with other automakers that are introducing new electric models, including Audi and BMW.
With orders now open, Tesla will finally have a car available that competes with lower priced models from General Motors, Toyota and Nissan. However as new competitors enter the market, it is not clear if Tesla will maintain its brisk sales of the Model 3, or if the automaker can actually keep up with higher demand.
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