Electric vehicle maker Tesla has announced a $35,000 version of its Model 3 sedan and a switch to online-only sales, in hopes of cutting costs while boosting demand and stock price before having to repay almost $1 billion in debt.
To help lower the price the firm plans to close showrooms and is switching to an online-only sales model.
Tesla on Thursday announced that the base Model 3, the $35,000 electric vehicle that buyers have been waiting for since the mid-size model was announced in 2016, is now on sale.
To date, the average selling price exceeded $50,000.
"The bears have more material to work with than the bulls", Morgan Stanley analyst Adam Jonas said, after the carmaker's announcement drew concerns about the company's brand power, profitability and demand.
Chief Executive Elon Musk's warning on profit during a conference call with members of the media, which did not include Reuters, contrasted with Tesla's statements last month that it was expecting a "very small" net profit in the first quarter.
News of the upcoming layoffs come as Tesla announced that sales of the $35,000 Model 3 were finally available, adding that all sales of Tesla vehicles would be moving exclusively online .
Tesla has 378 stores worldwide, with 20 stores in the United Kingdom and Ireland - some of which are combined with service centres.
The All-Wheel-Drive Long-Range Model 3 costs $63,800, and the top-tier Performance model's price is $78,600.
According to the company, the standard Model 3 will offer a range of about 220 miles, a top speed of 130 mph, and 0-60 mph acceleration of about 5.6 seconds. But in order to make it happen, Tesla had to cut costs elsewhere.
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Scott Gairns, managing director of Sophus3, which held its annual digital retail summit in London this week, said that Tesla's move towards purely online sales "will force the whole industry to accelerate the move to online auto sales".
In a blog post, Tesla said a test drive was not needed because you can return a vehicle within seven days, or after driving 1,000 miles, and get a full refund. "We are also making it much easier to try out and return a Tesla, so that a test drive prior to purchase isn't needed...you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free".
The company is confident that will not happen often. I wish there was some other way.
Why is the Model 3 important?
On Wednesday, the Tesla CEO promised he would have "news" at 2 p.m. California time (5 p.m. ET) on Thursday.
Strong sales of the Model 3 are critical to that effort.
It was the third cut this year for the Model 3 after a US$2,000 price-cut in January and a $1,100 reduction last month.
However, anyone speccing a new Model 3 won't be doing it in a Tesla Store.
"We see the switch to online sales as a sign the company has been unsuccessful in reducing the production costs of the Model 3 enough to profitably produce it at a US$35,000 price, and the plan as a "Hail Mary" in the face of a largely exhausted USA demand for higher priced variants".