Tesla drives down the price of its Model 3

Tesla drives down the price of its Model 3

Tesla's plan to close many of its physical retail stores as it shifts towards an all-online sales model "will force the whole industry to accelerate the move to online auto sales", it has been claimed.

Tesla Inc said Thursday it would offer a $35,000 version of its Model 3 sedan with a delivery time of two to four weeks while closing many of its retail stores worldwide, steps created to increase demand and cut overhead costs for the electric vehicle maker.

Tesla on Thursday unveiled firmware upgrades that will bring the range of the Long Range Rear-Wheel Drive Model 3 to 325 miles and increase the top speed of Model 3 Performance to 162 mph. A "small number" of stores located in high-traffic areas will be converted to galleries, showcases, or information centers, the company says.

The firm already has a much smaller physical presence in the United States than most other vehicle companies.

Tesla's long-term goal has always been to make a mass-produced electric vehicle that retails for $35,000 or less.

The online sales shift will enable Tesla to lower all vehicle prices by 6 percent, on average, including its higher-end Model S and Model X. "It is a hard decision but I think it's the right decision for the future", said Musk. Since tax credits will continue to decline over 2019, "this is really exactly what the doctor ordered", he said. "People want to buy things online".

That is particularly true of younger, technologically fluent consumers who already are accustomed to buying nearly everything at Amazon and having it delivered to them quickly, said Karl Brauer, the executive publisher of Kelley Blue Book.

Musk "doesn't need the whole world to buy into this", Brauer said.

Tesla is committed to making not just the best electric cars, but the best cars, period.

The $35,000 version of the Model 3 was supposed to roll out around the time it was revealed in 2016, but in order for Tesla to maintain production, the company focused on higher-priced versions of the auto.

But buyers will have to wait far longer than they do when shopping on Amazon.

Tesla offers Autopilot on all of its new cars as a $3,000 option, and the company has gone back to offering buyers the option of pre-paying another $5,000 for the Full Self-Driving system when it becomes available.

As part of the settlement, Musk stepped down from his chairmanship role and he and Tesla agreed to pay $US20 million each in fines. He added that the firm would "likely" turn a profit in Q2.

Tesla shares were down 3.1 percent in extended trading, at $309.90.

It was only last month that Musk said a $35,000 version that could be sold profitably was perhaps six months away. The SEC alleged Musk misled investors after concluding he did not have the money to pull off the deal.

This was confirmed in a blog post from the company.

The Tesla CEO has until March 11 to submit a brief to U.S. District Judge Alison Nathan on why he shouldn't be held in contempt.

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