Tesla drives down Model 3 price, announces it will close all stores

Buyers look over a Model 3 in a Tesla store in Cherry Creek Mall in Denver. Photo / AP

Tesla is shifting all of its sales from stores to the internet, saying the move is needed to cut costs so it can sell the mass-market Model 3 for a starting price of US$35,000 ($51,362).

The Palo Alto, California, company announced the change today and said it's now taking orders for the US$35,000 car, which CEO Elon Musk has said is essential to Tesla's survival.

Asked if Tesla's recently-opened Auckland store would close, or be turned into a service centre only, a Tesla Australia-New Zealand spokeswoman said there were "no updated other than what's in the blog," - a reference to a company statement posted online.

The Model 3 will have a starting price of US$35,000 ($51,362). Photo / Supplied

The Model 3 is expected to be available locally mid-2019.

The electric-car and solar-panel company will close many of its stores, but leave some open as galleries or "information centers" in high-traffic areas. On a conference call, CEO Elon Musk didn't give a number of stores that will be closed or employees who will be laid off. "That isn't today's topic," he said.

The company will offer the standard base model for US$35,000, which can go 220 miles (350 kilometres) per charge. It also will offer a US$37,000 version with a premium interior that accelerates faster and can go 240 miles (385 kilometres) per charge.

Tesla CEO Elon Musk. Photo / AP

Tesla started taking orders for the Model 3 in March of 2016, but until now hasn't been able to cut costs enough to sell them for US$35,000 and make a profit. The cheapest one that could be ordered until Thursday started at US$42,900.

"To achieve these prices while remaining financially sustainable, Tesla is shifting sales worldwide to online only," the company said in a statement. It added that cars could be ordered via smart phone in about one minute in North America.

It also pledged to make test drives easier, allowing buyers to return a car within seven days or 1000 miles (1600 kilometeres) for a full refund.

"Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free," the company's statement said, adding that it was confident people will like the car enough to keep it.

The online sales shift, Tesla said, will let it lower all vehicle prices by 6 per cent on average.

- AP