Musk recently told investors Tesla had completed the engineering and design of the Model Y, the crossover that will be smaller and cheaper than the Model X. About three-quarters of the Model Y's components will be shared with the Model 3, the company's first mass-manufactured auto.
Tesla debuted the $35,000 Model 3 almost five years after the firm first announced it would offer an affordable version of the luxury sedan.
The Model 3's previous starting price as of yesterday was just a bit over $42,000 so this is good for a seven thousand dollar discount.
Besides the Model 3, Tesla is developing a new Model Y SUV for 2020 production, while beginning to build a factory in Shanghai.
Inside, you still get the mega-screen interface, but the seats are cloth instead of leather, and you'll be forking out extra for on-board internet or Tesla's much-discussed driver assistance features. The standard version previously came with a metal roof.
The new $35,000 version has a top speed of 130 miles per hour (209 km per hour) and can go from zero to 60 mph in 5.6 seconds, Tesla said.
Over coming months, electric auto pioneer Tesla will shut down most of its showrooms, a move that it says is necessary in order to achieve lower prices to enable it to reach a wider market.
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"We believe that a $35,000 Model 3 has close to about 0 per cent gross margins today, suggesting that these price cuts could materially dilute Model 3 and company gross margins initially".
Musk reportedly blamed delivery problems and the expiration of a U.S. tax credit for some of the company's woes. But lately, Tesla has been more reckless and impulsive with investors' and customers' money than Ford or General Motors ever were. Customers are becoming increasingly comfortable making purchases online, and that is especially true for Tesla - which is a testament to the products we make. The company will offer a full refund within one-week or 1000-miles, allowing customers to try them and return without penalty, a concept Must said could partly replace traditional test drives. High-traffic locations will stay open and act as galleries or information centers.
Tesla reveals that by shifting to online sales, it will lower all vehicle prices approximately 6%.
Coinciding with the price drop, Tesla is also bringing back its "full self-driving" feature after it removed it in October, following criticism it was overstating the autonomy of its cars. "I wish there was some other way", Musk explained.
"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 blog said.
Musk, 47, didn't specify in his latest email to employees how many jobs will be impacted by the shift to online sales and said some workers will transition to other areas of the business.
The change will also save Tesla from dealing with ongoing issues in states where direct sales are not legal.