Published: Thu, February 07, 2019
Money | By Ralph Mccoy

Tesla cuts price of Model 3 - but not to $35K

Tesla cuts price of Model 3 - but not to $35K

Rows of new Tesla Model 3 electric vehicles are seen in Richmond, California.

Elon Musk has announced yet another price drop for Tesla's mid-range Model 3, slicing $US1,100 off the price to bring the all-electric sedan another step closer to the promised $US35,000 "mass market" benchmark.

Tesla is slashing the price of the Model 3 for a second time this year, days after rearranging the pricing and versions of the Model S and Model X amid mild price cuts. Tesla has also been cutting costs as it looks to turn in profits this year.

Now, Tesla has updated its website to the new pricing which shows that once the federal tax credit of $US3,750 and a fuel savings (based on 10,000 miles and a cost of $US2.85 per gallon) are applied, U.S. drivers can buy the mid-range Model 3 for $US34,850 ($US49,049). CEO Elon Musk says the Model 3 must be competitive with gasoline-fueled cars for the company to succeed. "It's a super hard grind", he wrote.

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This price drop comes on the heels of another Tesla service update: On Feb. 2, the company ended its customer referral program, which allowed Tesla owners to earn prizes with referrals.

The latest quarterly report suggests Tesla is making progress in lowering production and component costs for the Model 3, slashing man-hours required to build each unit.

USA Today business reporter Nathan Bomey on Tesla's fourth-quarter results and outlook.

The Palo Alto, California-based company's share were down 0.45 percent at $319.89 in premarket trading on Wednesday.

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