Tesla’s Model 3 to Sell for $35,000

• Tesla’s Model 3 to Sell for $35,000

Elon Musk, CEO of Tesla Inc, announced on Thursday that Model 3 electric car will now sell for $35,000 from $50,000.

In 2017, Musk promised to lower the car price in order to increase electric car usage in the U.S. and across the world.

The question most analysts are now asking is how would the company make up for the difference in price.

Well, Elon Musk, who spoke with reporters on phone, said the company plans to close some of its stores across the country and focus on online sales. That will save the company about 5 per cent in cost.

According to Musk, there is no better way to achieve the required savings needed to sell the model at $35,000.

“Tesla pioneered direct-to-consumer sales, and the stores were always more of an advertising portal than an actual transaction portal,” said Mike Ramsey, an automotive consultant with researcher Gartner Inc. “Closing the stores themselves is not that crazy; the real issue for Tesla is their service capability.”

The company shares however tumbled after the CEO said the company is not expected to market profit in the first quarter but ‘think’ profitability is possible in the second quarter.

“Given that there was just a lot happening in Q1, and we’re taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk said on a call with reporters. “But we do think that profitability in Q2 is likely.”

Shares of Tesla fell by 4.9 per cent to $304.07 in pre-market trading on Friday as investors seem to be selling off their holdings.