Tesla drives down the price of its Model 3

Tesla drives down the price of its Model 3

Recall, Musk last May said that selling the minimum cost Model 3 at the time would "cause Tesla to lose money and die". The stock is still up from where it was two days earlier, when the CEO tweeted the company had news to share.

Tesla CEO Elon Musk teased in a series of Twitter posts Wednesday that "some Tesla news" would be released Thursday at 5 p.m. ET. However, the most eye-catching part of the announcement wasn't about the vehicle, but about the company's decision to move its sales exclusively online. The company has 378 stores and service locations worldwide. However, the company said other features for this system are coming later this year, and full self-driving capability without driver oversight will be available when regulations allow.

As for the bad news, Tesla is moving all sales of its cars online.

Tesla said customers who were not satisfied with an online purchase could choose to return a vehicle within 7 days or 1,000 miles for a full refund.

As Tesla says in its official news announcement, "Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free".

The company is confident that will not happen often.

Depending on specification, Tesla is giving guidance that deliveries will start in two to four weeks. However, customers with orders already in queue will get priority, which could delay some deliveries until June, Mr Musk said.

"More price cuts supports view of softening demand, lower margins".

Why is the Model 3 important?

Musk's forecast was 1,00,000 to 1,40,000 more than what the company had announced in a January 30 shareholder letter.

Strong sales of the Model 3 are critical to that effort.

Tesla will need some stellar sales performances in Europe and China this quarter to deliver on Musk's promise of 50 percent growth in 2019 and quarterly profits.

The online sales shift will enable Tesla to lower all vehicle prices by 6 percent, on average, including its higher-end Model S and Model X. And then there's Autopilot, which will set you back $3,000 if you order the auto with it, or $4,000 after delivery. As a result, most of the EV maker's stores will close over the "next few months." .

According to chief executive, Elon Musk, the self-driving software will get an upgrade later this year which will allow it to navigate in more complex city environments.

Vandeventer still likes Tesla's innovative, forward-thinking nature, but worries about the short term. By building only more expensive versions for more than a year, Tesla made sure that customers waiting for the base model now see exactly what they'd be missing out on, rather than being excited about the vehicle being available within their budget. When users clicked through the website, a Tesla logo appeared onscreen with a message reading, "The wait is nearly over" at the URL "www.tesla.com/soon", adding to the suspense of the undetermined impending news. The base-or standard, as Tesla calls it-Model 3 starts at $36,200, including $1,200 destination charge, and comes with an estimated range of 220 miles.

Tesla will also be "significantly reducing" its spending on sales and marketing, which will help make the announced price changes possible, Musk wrote in an email to employees.

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