Tesla announces second Model 3 price cut

Tesla cut the price of its mid-sized Model 3 for the second time in a few weeks to boost sales as well as ending its customer referral programme.

Before the Model 3 came along Tesla’s vehicles were all in fairly high price brackets. The mid-sized Model 3 is set to take the company into more affordable sectors, but it’s still relatively expensive in comparison to equivalent internal combustion models. Of course the Tesla rental London companies offer is a way of trying one of the cars for yourself and seeing what they have to offer without making a large financial commitment.

Ending incentives

In early January the company announced a $2,000 price cut to the Model 3 – along with other Tesla models – in response to a reduction in the federal tax credit that buyers of electric vehicles were eligible for in the US. It has now announced a further $1,100 price drop, taking the base price of the Model 3 car down to $42,900. 

As of the beginning of February Tesla CEO, Elon Musk has also announced the end of the company’s referral programme. This gave people who referred friends to buy a Tesla free access to the company’s Supercharger network for a few months. Top referrers had the chance to win prizes including a new generation Roadster sports car.

Is this bad news?

There has been speculation about what these moves mean for the company and its profitability. Tesla’s share price fell 0.5 percent on the latest news and has dropped by 3.4 percent since the turn of the year. The company also delivered fewer Model 3s than expected in the final quarter of 2018. Despite this, though, the company delivered almost a quarter of a million cars in total over the course of the year – equivalent to the number produced in all its previous years added together.

While the company was profitable for the first three months of last year it has made losses for the remaining nine months. We have seen that investors have hitherto been bullish about the company’s prospects; moving into a sector of the market that is more price sensitive is clearly having an effect.

In response Musk has also announced a cut in the company’s headcount by around 7 percent, saying that it faced challenges in producing affordable vehicles while remaining profitable. Musk says he is committed to reducing costs and to achieve environmental sustainability. He has said that in the longer term he wants to see the Model 3 selling for less than $35,000. If you want to try a car in the meantime Tesla rental London choices is a way of doing so at low cost. 

While Tesla is clearly grappling with its business model at the moment, demand for electric cars is likely to increase worldwide and that’s positive news for the business in the long term. If Musk can succeed in his cost cutting initiatives there is no reason why Tesla can’t succeed in the longer term.

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