Electric car maker Tesla has announced a $35,000 version of its Model 3 sedan and a switch to online-only sales, in hopes of cutting costs while boosting demand and stock price before having to repay nearly $1 billion in debt.
“To achieve these prices while remaining financially sustainable, Tesla is shifting sales worldwide to online only. You can now buy a Tesla in North America via your phone in about 1 minute, and that capability will soon be extended worldwide,”the company announced in a blog post on Thursday afternoon.
The new $35k version of the Model 3 will have a top speed of 130 miles per hour (209 km/h) and accelerate from zero to 60 mph in 5.6 seconds, with a range of 220 miles. Delivery of the budget model will take two to four weeks.
For a “Standard Range Plus” model with a 240-mile range, slightly higher speed and acceleration, and fancier interiors, customers can pay $2,000 more – a six percent higher price for 9 percent more in features, as the company put it.
The switch to online sales is going to mean layoffs and closures of Tesla’s retail stores at upscale shopping centers, but the company hopes to reduce overhead to break even in the first quarter of 2019. CEO Elon Musk told investors on a conference call Thursday that the company does not expect to be profitable in Q1, but will return to profitability in the second quarter, per CNBC.
Tesla also announced it was developing a Model Y SUV that would begin production in 2020, and starting to build a factory in Shanghai, hoping to solve the problem of delivering vehicles to China.
Musk reportedly blamed delivery problems and the expiration of a US tax credit for some of the company’s woes. A federal tax credit for Tesla buyers started to expire last month, raising the price of the cars by almost $4,000.
Tesla went so far as to urge customers to abuse the new return feature, which lets buyers return cars within 7 days or 1,000 miles for a full refund.
Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free.
On Friday, Tesla is due to repay a $920 million convertible bond, and will have to do so from its $3.7 billion cash on hand unless stocks somehow rise $50 above the current values. The company’s stock fell 3.6 percent in after-hours trading.