Tesla announced its long-awaited $35,000 Model 3 today (Feb. 28). For more than two years, Tesla has been ramping up production of its first mass-market sedan, marketed as an affordable alternative to its luxury Model X SUV and Model S sedan, both of which have starting prices above $75,000.
The masses will no longer have to wait. The new $35,000 Model 3 will come with a standard interior, a 220-mile range battery pack and top speed of 130 MPH. The premium option, Model 3 Standard Range Plus, will offer 240 miles of range and most premium interior features for $37,000 (without incentives).
Tesla has struggled to hit its Model 3 price target. Before now, the base price has not dropped below $45,000, with most selling for $60,000 or more. Tesla tried to spin its latest version with a smaller battery, and a $7,500 federal tax rebate, as its low priced option, but hundreds of thousands of buyers on Tesla’s Model 3 waiting list appear to have been waiting for the original price.
Critics see the move as a way to spur flagging demand, but Tesla says it reflects greater efficiencies in manufacturing and distribution. The company said by email it will shift all sales worldwide online and smartphone app. Its stores will become galleries and information centers. It will reduce its workforce by closing some stores.
“This is the lowest price we could possibly sell this car,” CEO Elon Musk said in a call following the announcement. “It’s excruciatingly difficult to make this car for $35,000 and still be financially sustainable, hence the unfortunate need to reduce headcount.”
Tesla is also extending its return policy to 7 days or 1,000 miles for a full refund.