A new, cheaper Tesla Model 3 is on its way
Tesla is now offering a slightly cheaper version of its lowest priced car, the Model 3.
CEO Elon Musk announced the new version in a tweet early Friday, calling it a “lower cost, mid-range Tesla Model 3.” The new version will have a starting price of $45,000. Previously the cheapest version of the Model 3 available started at $49,000.
The mid-range battery can take the car 260 miles on a single charge. Battery range is one of the determining factors in the price of an electric vehicle. The long range battery can last 310 miles, but those cars have a $54,000 starting price. (The previous $49,000 version of the Model 3 is no longer available. It combined the cheaper rear-wheel drive option with the pricier long range battery.)
Tesla (TSLA) says the standard battery model, which is expected to go about 200 miles on a charge and start at $35,000, won’t be available for four to six more months. That model will get the Model 3 close to Kelley Blue Book’s estimate of a $35,541 average price of all new cars sold in the United States.
Customers who buy Teslas before December 31 are eligible for a $7,500 tax credit. People who buy the new version might not make the deadline: Tesla says they’ll ship in six to ten weeks.
For Tesla buyers, that credit falls to $3,750 on January 1, 2019 and to $1,875 on July 1, 2019. That means people holding out for the $35,000 version of the Model 3 won’t get the full tax credit. The credit for Tesla buyers disappears altogether in 2020.
Strapped for cash and in need of profit, Tesla built only the pricier dual motor all-wheel drive version of the Model 3 at the end of the third quarter, although it had previously built some rear-wheel drive Model 3’s. The new $45,000 model is rear-wheel drive.
Tesla has tried to reassure investors that it will be profitable in the third and fourth quarters of this year. The company delayed the rollout of the $35,000 version of the Model 3 in order to raise the cash that Tesla needs.