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Tesla Chief Unveils a $35,000 Model 3 (That Actually Costs a Bit More)

Tesla Chief Unveils a $35,000 Model 3 (That Actually Costs a Bit More)

By Drew Harwell, The Washington Post | Updated: 19 October 2018 09:53 IST

Highlights

Before the discounts, it will sell for $45,000
Its price reduces after taking into account federal, state tax rebates
Car is far cheaper because buyers will save money on gas, says company

Tesla chief Elon Musk said late Thursday that the automaker was preparing to sell the cheapest version yet of its newest electric car, the Model 3, signalling an attempt to get back to business after months of controversy.

Musk said on Twitter that the sedan, with its "midrange" battery pack, would cost $35,000 (roughly Rs. 25 lakhs), bringing it in line with the mass-market model he had promised for years would revolutionise the availability of electric cars.

But that price takes into account federal and state tax rebates. Before the discounts, it will sell for $45,000 (roughly Rs. 33 lakhs) - though the company says buyers should think of the car as far cheaper, because of the money they'll save on gas.

Musk sparked a frenzy of customer reservations in 2016 when he said the Model 3 would cost $35,000 before incentives, such as a $7,500 (roughly Rs. 5.5 lakhs) federal tax credit - a price point that would help Tesla expand beyond its traditional range of well-heeled buyers. That model, however, remains delayed until 2019, the company said Thursday.

The surprise announcement, delivered via tweet to Musk's 23 million followers, comes as Tesla seeks to steer attention away from a chaotic period in which Musk battled with critics, smoked marijuana during an interview and pledged that he had the money to take Tesla private - a promise for which he was sued by the Securities and Exchange Commission, and which he recently settled.

Musk agreed as part of the settlement to step down as the company's chairman for three years, opening a prominent void for which the company has yet to fill. But the announcement again highlights Musk's enduring role as the company's chief executive, designer and hype man.

Musk said Thursday the car would be sold via Tesla's "super simple new order page," which estimated that delivery for its midrange model would take six to 10 weeks. That model, the company said, could go 260 miles on a single charge.

The only available Model 3 for the last year has been a long-range version, offered mostly at luxury prices. But Musk said a "truer cost of ownership" for the midrange version would be about $31,000, his estimate for discounting the cost of gas.

The move could ratchet up the pressure on Tesla's already-straining California factory and its nationwide system built to deliver cars to customers, which Musk described last month as mired in "delivery logistics hell."

"As Model 3 production and sales continue to grow rapidly, we've achieved a steady volume in manufacturing capacity, allowing us to diversify our product offering to even more customers," a Tesla spokesperson said in a statement.

The move could frustrate Tesla fans who put down a $1,000 deposit two years ago for what they believed would be a sleek electric sedan costing about $27,500 after tax incentives.

Tesla says the "standard battery" version will not be available for another 4 to 6 months. Musk has said the company, a cash-burning giant that faces billions of dollars in impending debts, must push out more profitable and expensive versions first: Shipping the cheapest "Model 3 right away (would) cause Tesla to lose money & die," he tweeted in May.

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