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Tesla’s promised $35,000 Model 3 is finally here

Tesla is finally rolling out the long-awaited $35,000 version of the Model 3 in the United States. The company is currently making multiple versions of a “Standard Range” Model 3 that can travel around 220 miles on a single charge. Previously, the most affordable Model 3 started at $42,900 after a February price reduction.

The Standard Range base model will start at $35,000, offers a top speed of 130mph and can go from 0 to 60mph in 5.6 seconds. A second version called “Standard Range Plus” will be available for $37,000 with 240 miles of range, a top speed of 140mph, and will go from 0 to 60mph in 5.3 seconds. The Standard Range Plus model will also come with “premium interior features,” according to Tesla.

The new versions of the Model 3 will come with an all-glass roof, which wasn’t originally supposed to happen when the car was announced. But they will have manual, not power, seats. They will also come in black, and other colors will add to the cost. The new Model 3s will be available in Europe and China in “three to six months,” according to CEO Elon Musk.

“From the beginning, this has been the goal,” Musk said on a press call about the news. “It’s an incredible car.”

The new versions of the Model 3 are available to order online now, and in fact, that’s now the only way people will be able to buy Tesla’s cars. The company says it is shifting all sales worldwide to online only, so you’ll no longer be able to buy a car in one of the company’s stores. By moving all sales online, Tesla says it will be able to lower the price of its cars by 6 percent, which is how it was able to finally get to the $35,000 price point.

As a result of this change Tesla says it will be “winding down many of our stores.” A small number will stay open in “high-traffic locations” to serve as “galleries, showcases and Tesla information centers,” the company says.

That will mean layoffs, Musk said on the call. “There’s no other way for us to achieve the savings required to provide this car and be financially sustainable,” he said. “I wish there was some other way, but unfortunately, it will entail reduction in force on the retail side. There’s no way around it.”

The interior of the new Standard Range Model 3.
Image: Tesla

Musk didn’t say how many employees will be laid off, or if the layoffs were counted in the workforce reduction announced in January. Tesla did say it will be expanding service centers, though, which could increase headcount. “My top priority this year is making service amazing,” Musk said.

Tesla says it will also now allow buyers to return any car for a full refund within 7 days or 1,000 miles. “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 said in a blog post. This is also how the company will make up for the test drives it currently offers at stores, Musk said on the call.

The Model 3 was always supposed to start at $35,000 dating back to its reveal in 2016, but Tesla had to focus on higher-priced versions of the car once it was in production. The company would “die” if it sold the more affordable version too soon, Musk said in 2018, in part because of how much money Tesla had committed to getting the Model 3 off the ground. Higher-priced versions of the Model 3, which have sold for as much as $70,000, came with big margins that allowed Tesla to turn its first quarterly profits in two years.

In addition to the news of the $35,000 Model 3, Tesla said Thursday that it’s shipping a number of new firmware updates to cars that are already on the road that will improve performance. Post-update, the “Long Range Rear-Wheel Drive Model 3” will see its max mileage jump to to 325 miles. The most expensive version, the Model 3 Performance, will see its top speed jump to 162 mph.

Tesla has felt pressure from customers and investors to release a $35,000 Model 3 for years, and that has only increased in recent weeks as analysts started to question how much demand there is for the car in the US. One thing that has some analysts worried is that potential customers have been scared away because Tesla’s cars are no longer eligible for the full $7,500 federal tax credit for electric vehicles. On a call with investors in January, Musk said Tesla currently isn’t making any Model 3s to be sold in the US — the company’s full resources were being committed to making cars for Europe and China.

Musk did announce on Thursday’s call that long-time reservation holders will get priority for deliveries. “We need to assess how many reservation holders wish to buy [the new cars],” he said.

But Musk admitted that demand is a question. “I mean, I don’t know what the demand is. We’ll see,” Musk said. He estimated that there could be demand for 500,000 Model 3s in the US — a number that recently got him back in trouble with the SEC.

One thing Musk was sure of is that the Model 3 will never cost less than $35,000. He had previously suggested it might be possible to lower the price to $25,000 in an August 2018 interview with YouTuber Marques Brownlee.

“It’s excruciatingly difficult to make this car for $35,000,” he said Thursday. Future models could cost less than the $35,000 Model 3, Musk added, but those won’t exist for “at least two to three years.”

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