Tesla Launches $35K Model 3, Shutters Most Physical Stores

Tesla finally delivered on its promise to begin shipping a low-cost, entry-level Model 3 for consumers. But, in order to achieve that feat, the company announced that it plans to shift to an online-only sales model, effectively closing down all of its physical retail locations.

It’s long been a goal of the company to hit the $35,000 price point for its long range electric vehicles, and Tesla has now accomplished that by lowering the price of the basic Model 3—a vehicle with 220 miles of range, a top speed of 130 mph, and a 0-60 acceleration of 5.6 seconds. Despite the lower cost, Tesla said in a statement, the new standard Model 3 is still built to a “perfect 5-star safety rating.” In addition, the company announced a new $37,000 Model 3 Standard Range Plus that offers 240 miles of range, a 140 mph top speed, and 0-60 acceleration in 5.3 seconds.

In order to compensate for the lower-cost standard Model 3 and still “financially sustainable,” Tesla said it plans to shift all of its sales online. The company said the online purchase process takes about a minute, and that that capability will be extended worldwide. In addition, the company is relaxing its test drive and return policies to make it easier to try out and get refunds for their cars. Specifically, Tesla said, consumers will have a seven-day, 1,000-mile return window.

In shifting all sales online—and shuttering most of its 200 stores around the world—Tesla said it will be able to lower the prices on its vehicles by about 6 percent on average, which allowed it to achieve that $35,000 price point. Because of the current car industry laws in the U.S., which require car manufacturers to sell through authorized dealerships, Tesla hasn’t been able to sell directly to consumers in its 80 U.S.-based “stores,” so it operates those locations as educational, nonretail showrooms. The company does sell cars out of its other 120-some locations around the globe.

“Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers,” the company’s statement read. “The important thing for customers in the United States to understand is that, with online sales, anyone in any state can quickly and easily buy a Tesla.”

Further, Tesla said it plans to increase its investment in their service system, with the goal of offering same-day service done by Tesla technicians coming to the customer.

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