The Disappearing $35,000 Tesla Model 3

[William Maley]

It was only eight weeks ago when Tesla finally announced that the $35,000 Model 3 would be available to order. This news caused the internet to go crazy on this news as it would become the most affordable model in Tesla's lineup. But late this week, the Californian automaker made some changes to the Model 3 ordering process to "simplify vehicle choices and make Autopilot more affordable."

On Thursday, Tesla said in a blog post that the $35,000 Model 3 - known as the Standard Range - would not be available to order online. If you want one, then you need to either find Tesla store that is still open or call the company directly. Why is this happening?

Quote

Last quarter, we introduced two new Model 3 variants with more competitive pricing than ever before – Standard and Standard Plus. Since then, Standard Plus has sold at more than six times the rate of Standard, far exceeding our expectations.

Given the popularity of the Standard Plus relative to the Standard, we have made the decision to simplify our production operations to better optimize cost, minimize complexity and streamline operations. As a result, Model 3 Standard will now be a software-limited version of the Standard Plus, and we are taking it off the online ordering menu, which just means that to get it, customers will need to call us or visit any one of the several hundred Tesla stores.

(Author's Note: A quick refresher; the Model 3 Standard Range gives you 220 miles, while the Standard Plus offers 240 miles. -WM)

There is some dispute to the claim of the Standard Plus outselling the Standard. In late March, The Drive reported that a number of customers have gotten text messages from Tesla saying their deliveries have been pushed back without a new delivery date. Several have reported getting calls from Tesla trying to upsell them into the Standard Plus model.

In Tesla's blog post, the off-menu version of the Model 3 will see its range decreased by 10 percent when compared to the Plus model, along with "several features will be disabled via software (including our onboard music streaming service, navigation with live traffic visualization, and heated seats)." Tesla also announced that Standard customers will have the option to upgrade to the Plus at any time, along with the option for Standard Plus owners to convert their model to the Standard and get a small refund "for the difference in cost." 

As for pricing, the Standard Plus will now set you back $39,500 - up $2,000 over the previous Standard Plus. This is due to Tesla making Autopilot standard on all of their models. No pricing was given for the secret Model 3 Standard.

“Tesla is now facing a reckoning. Between the cost cuts, waning demand for its vehicles and now making the $35,000 Model 3 much harder to buy, the company is now quietly realizing it has to play by the same rules as every other automaker,” said Jessica Caldwell, executive director of industry analysis at Edmunds.

But wait, there's more!

Tesla also announced that it would be offering a lease for Model 3. It is a 36-month lease with mileage options ranging from 10,000 to 15,000 miles per year. But there is a big caveat to this. Unlike most leases where you can buy the car at the end of the lease, Tesla is not allowing any Model 3 customer to buy their vehicle after the lease. The automaker is planning to use them in their upcoming ride-hailing network.

Source: Tesla, Bloomberg (Subscription Required)

Photo by Vlad Tchompalov on Unsplash

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[G. David Felt]

The shine is off the newest fruit of tech love and Tesla is about to get a wake up call as other OEMs start bringing their EVs to market that gives them an electric CUV rather than a car. The car days are over at this time, people want activity vehicles and that usually means a CUV, be it FWD, RWD or AWD. People want the perceived space and versatility that marketing has pushed out for years about a CUV over a car.

[Drew Dowdell]

I think the interesting thing is the no lease buyouts. If Tesla really does have the most loyal customer base next to Porsche, then that forces their customers into a new lease every 3 years.  It's Brilliant!

[G. David Felt]

3 hours ago, Drew Dowdell said:

I think the interesting thing is the no lease buyouts. If Tesla really does have the most loyal customer base next to Porsche, then that forces their customers into a new lease every 3 years.  It's Brilliant!

True just as all software is pushing to go to monthly or yearly payments for ongoing for ever software revenue stream, leasing is what will keep the money flowing if they can keep their customers once others OEMs start bringing out their EV hardware.