Tesla Shakes Up Model 3 Lineup, Killing $35,000 Base Price

Tesla disappears its vaunted $35,000 Model 3 in a confusing update, after apparently failing to deliver a single one.

Tesla

Ever since Elon Musk published his "master plan" for Tesla in 2006, an affordable electric car has been the California startup's holy grail. But just weeks after opening orders for the base "Standard Range" version of its Model 3, Tesla appears to have killed off any dream of selling a car at the national average new car price of $35,000... apparently without producing a single one. 

In a new blog post Tesla outlines a number of changes to its lineup, starting with the decision to bundle the Autopilot option into the base price of all its vehicles. Tesla says this move is "very important because our data strongly indicates that the chance of an accident is much lower when Autopilot is enabled," although nearly every statistic it has provided to prove Autopilot safety has been debunked and the rate of crashes in its linked safety report has gone up every quarter since the company started reporting them. Bundling Autopilot also raises the base price of its cars by $2,000, which would seem to increase the cost of the base Standard Range 3 from $35,000 to $37,000 (although Tesla doesn't explicitly confirm this, only providing the example of the $37,500 Standard Plus price increasing to $39,500). Tesla will also be removing the Standard Range from its online order system, making it another baffling "off-menu" item that requires a call or visit to a store to order. 

According to Tesla, the more expensive"Standard Plus" trim level "sold at more than six times the rate of Standard, far exceeding our expectations," and as a result the Standard Range version "will now be a software-limited version of the Standard Plus" with 10% less range and features like music streaming, live traffic and heated seats disabled. Previously the Standard Range was supposed to have a distinct battery pack with 220 miles of range, but under the new plan the Standard Range will have the 240 mile Standard Plus pack limited to just 216 miles of range. Tesla says the move will "simplify our production operations to better optimize cost, minimize complexity and streamline operations," which stands to reason given that it will reduce the number of pack versions. That said, the new Standard Range seems to be down four miles of range compared to the previous 220 mile target, presumably due to the heavier weight of the limited Standard Plus pack.

This is a pretty big deal, considering that previously announced that it would have to shut down stores to deliver on its $35,000 base price promise, before backtracking from that plan. In the meantime, it has scheduled and then delayed Standard Range deliveries and we still have yet to see a single online report of an actual customer delivery of a $35,000 Model 3. By waiting as long as possible to announce deliveries on the base price version, upselling reservation holders waiting for it and making the next trim level up more appealing, Tesla seems to have followed the same gameplan that led it to similarly cancel the 40 kWh base Model S way back in 2013. Tesla had also heavily hyped the $50,000 (after federal tax credit) base price of that model, and even made it the centerpiece of its government loan application, before excluding it from Superchargers and then canceling it due to ostensibly low demand.

Tesla also says it will be adding leasing for Model 3 in the United States, but doesn't provide details beyond that it will require a "small down payment," offer "competitive monthly payments," and have mileage options of 10,000, 12,000 or 15,000 miles (presumably per year). It does not specify the length of available leases, its leasing partner (if any) or any actual dollar amounts, making it all but impossible to assess what impact this move could have on Model 3 demand or Tesla's finances, both of which have come under increasing scrutiny of late.