Published: Thu, February 07, 2019
Finance | By Loren Pratt

Tesla cuts Model 3 price for the second time this year

Tesla cuts Model 3 price for the second time this year

The big picture: Tesla has lowered the cost of its Model 3 for the second time in as many months although the entry-level electric sedan still hasn't reached the promised $35,000 base price.

The company is ramping up production of the Model 3 and trying to make it more accessible for mainstream auto buyers.

In an effort to lower the price of the auto, Musk, who is also the founder of rocket company SpaceX, has slashed more than 3,000 jobs and ended a customer referral program.

The price cut brings the best-selling EV to $US42,900 ($A60,380) before federal tax incentives and fuel savings, which once taken into account mean the mid-range, rear wheel drive Model 3 will have a final cost of under $US35,000 ($A49,260) - and even less in some states.

Speaking at Tesla's Q4 2018 earnings call last week, the CEO said that, "We're reducing our costs while making nuanced improvements to the Model 3".

In a tweet at 2 a.m. ET on Wednesday, Chief Executive Elon Musk shared a Tesla post announcing the new price would be $42,900.

The move follows a US$2,000 price cut on all Teslas announced in early January to partially offset the reduction in the USA federal tax credit its vehicles were eligible for.

Musk told a Twitter user that the company is "doing everything we can" to drop the Model 3 base price to $35,000, without credits. "It's a super hard grind", Musk tweeted. All variants of the Model 3 will now start at $1,100 less, with the tradeoff being the end of the customer referral program. A spokesman said the program cost far more than the company had realized.

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