In 3-5 years, many Tesla vehicles are going to be needed as self-driving taxis.
The Model 3 is "excruciatingly difficult" to make at the reduced price, Musk told reporters on a conference call.
Tesla CEO Elon Musk sent an email to staff about the company's shift to online-only sales and warned there will be job losses for sales and marketing staff. Because of the moves, it will lose money in the first quarter and "likely" be profitable in the second, he said. "It's not something you go pick up a loaf of bread, milk and you buy a Tesla", said David Koehler, a marketing professor at the University of Illinois-Chicago.
In a statement released by the company, Tesla announced that the company would be shifting all sales of Tesla vehicles online. But when customers can quickly see how long it'll take for their auto to be completed the staff will spend less time on the phone and more time actually fixing the vehicle. The stock had run up more than 7 per cent in the past two sessions since Musk teased the announcement through cryptic tweets that fueled rampant speculation.
The Silicon Valley electric vehicle maker plans to close most of its stores worldwide and go strictly to internet sales as it tries to cut overhead so it can sell a base Model 3 for $35,000 and still make money. It also means Tesla is "winding down" many of its stores. Big price cuts as unwanted inventory piles up.
Until now, Tesla has concentrated on selling Model 3s with long-range batteries and more equipment, meaning the average price paid was around $50,000 (£38,000).
A $35,000 Model 3 is a major shot in the arm for Tesla sales during a period of major challenges, including deliveries of the Model 3 to Europe and China and construction of a factory in Shanghai.
"Given its seeming abruptness, it does not appear that yesterday's announcement was made from a position of strength". That's part of the reason it can sell the cheaper Model 3 affordably, the company said.
Former Packers coach Mike McCarthy under investigation after berating high school referees
Although audio cannot be heard, McCarthy can be seen gesturing until the referees continued on their way and he turned and left. McCarthy coached the Packers from 2006-18, leading the team to one Super Bowl title and nine playoff appearances.
Rates market-perform, price target US$325. It'll be interesting to see how this plays out, and if other automakers follow the company's lead in the near future.
And the used-car site Carvana, which does sales totally online, more than doubled its sales past year to over 94,000, even though it started selling vehicles in 2013. "If orders jump by 100,000 units (which we believe is possible), that alone can pull in US$250 million of cash onto the balance sheet".
"As always, bulls/bears will both be in an anguished frenzy about the implications of last night's announcement/press call". This is $8,000 less than its previous price of $96,000. The company's shares were down about 3.6% after hours.
As for the bad news, Tesla is moving all sales of its cars online.
Rates equalweight, price target US$350.
To get "full self-driving", buyers will need to stump up $5,000 extra, which enables "automatic driving from highway on-ramp to off-ramp including interchanges and overtaking slower cars", auto-parking, and "summon", the feature that makes a parked vehicle find the owner.
"We do not think this was the original plan envisaged by Tesla management and bullish investors", but instead pointed to the difficulty and expense of producing the Model 3 at a targeted 25 per cent gross margin, wrote JPMorgan analysts in a note.