Elon Musk’s Tesla Motors has reduced prices of its Model3 by $1,100, by bringing starting value of its lowest priced model to about $42,000 before incentives. The three versions have seen similar kind of reduction, which includes rear wheels drive, all wheels drive as well as the performance models. During a statement given by Electrek, the spokesperson of Tesla said that this reduction was initially done as the company was ending up its referral program dated 1st February, which cost the company more than what it has expected. The intention behind starting this program was increasing the demand by creating mouth publicity, but the customers who have been waiting for the vehicles realized that it was not necessary.
The very cheapest model of Tesla is now going to cost $39,150 after taking advantage of government tax credit that effectively added $1,875 to cost of cars. An un-subsidized starting price of $35,000 was the aim of Tesla’s Model 3. This is going to be the target price which represents large market scale and affordability. But, in a tweet, Elon Musk, the CEO of Tesla said that this was a very hard grind for reaching to this price. Elon Musk spoke about the needs for increasing the production capacity and improving the manufacturing designs for reducing the prices of cars as expected to be $35,000.
In the letter which was returned in January saying about the layoffs, Elon Musk told that Tesla needed to have larger economy of scale for aiming at producing a car worth $35,000 and still staying as the viable company. Along with this, the shipments of Model 3 just have started to come, the cheapest model of Model 3 was the all wheels drive double motor version, starting at a price of around €53,500 which is equivalent to $60,000. Elon Musk attributes higher costs of Model3 to import duties and VAT.