Several years after it was first announced, Tesla has made cuts throughout its manufacturing and sales departments in order to launch a $35,000 version of its “entry level” all-electric Model 3 sedan. The official name in case you're ordering one, is the "Standard Range." If you want to be a stickler for detail you can point out to anyone who will listen that it actually costs $36,200 with destination and documentation fees, without which you can’t get one, like every other car sold in America, but it’s still a significant step forward for Tesla.
Drastic cuts across the board were necessary to offer the car at this price.
“It’s hellishly difficult to reduce the cost of the car,” Musk said, as so many other first-time carmakers have said before him. “There are 10,000 unique parts and processes involved in making the car. Each one is $3.50 or thereabouts. In order to make the car and still have enough for R&D, we really need to reduce that figure to $3.00. That means we need to figure out, on average, 50-cent reductions. It’s a game of pennies, it’s like a Game of Thrones but with pennies.”
And they have reached the limit with this model.
“This is the lowest we can possibly sell this car,” Musk said. “It’s excruciatingly difficult to make this car for $35,000 and still be financially sustainable. I wish there was some other way to do it.”
In addition to manufacturing efficiencies, the most significant changeup in the arrival of this Model 3 is the total elimination of all Tesla stores in favor of online sales only.
“This substantially opens up our ability to sell cars,” Musk said. “It’s 2019, people want to buy things online.”
Musk says the new sales process, which can be handled entirely by smart phone, will be much faster.
“You can buy your car online within about one minute,” Musk said on a conference call. “We will still have stores, but they will be converted to galleries and information centers. If you do go to the store they will simply show you how to buy the car online.”
And the test-driving experience will be unlike any other. The traditional test drive will be replaced by simply buying the car then returning it if you decide you don’t like it.
“You can own the car for a week and drive 1000 miles and if you don’t like it you can return the car for a full refund,” Musk promised. “It’ll be super easy to get a refund, like, one quick refund.”
That oughta eliminate buyer anxiety.
“With the highest consumer satisfaction score of any car on the road, we are confident you will want to keep your Model 3,” Tesla said in a statement.
“People really should not have concern about placing an order. We want to make it incredibly easy to hand the car back and get a refund,” Musk said.
The new $35,000 Model 3 Standard Range will have its own interior, separate from more upscale Models 3, but not cheap-looking.
“The interior will be slightly better than promised,” Musk said. “Slightly better than what was originally intended.”
And there will be no skimping on safety.
“Although lower in cost, it is built to achieve the same perfect 5-star safety rating as the longer-ranged version, which has the lowest probability of injury of any car ever tested by the U.S. Government,” Tesla said in a statement.
Safety sells.
“We’re also confident that the car insurance will be lower,” Musk said.
If you want to move just a little upscale from entry level Standard Range, Tesla is offering a Model 3 Standard Range Plus, with 240 miles of range, 140 mph top speed and 0-60 in 5.3 seconds. The Standard Range Plus includes “most premium interior features” and stickers at $37,000, or $38,200 including mandatory destination and documentation fees.
“For 6% more money, you get 9% more range, more power and an upgraded interior,” read a statement from the carmaker.
Service, too, will be improved, Musk promised.
“We will be significantly increasing headcount in service technicians,” Musk said. “My top priority this year is making service exceptional.”
Musk said he is confident that there is a demand for half a million of these. Will there be another car in Tesla’s future that is even cheaper? Yes, probably in two to three years, Musk said.
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