Tesla chief Elon Musk said late Thursday that the automaker was preparing to sell the cheapest version yet of its newest electric car, the Model 3, while quietly rolling back promises that helped position Tesla as a groundbreaking automaker.
But that price takes into account federal and state tax rebates. Before the discounts, it will sell for $45,000 — though the company says buyers should think of the car as far cheaper, because of the money they’ll save on gas.
Tesla also quietly removed a controversial preorder option for its “full self-driving capability” mode, which it has been selling for two years as an add-on for $3,000 to $5,000 — even though the technology isn’t ready yet. Once it is ready and approved by local regulators, Tesla said it would roll out the technology via future over-the-air updates.
In a Thursday tweet, Musk said the option “was causing too much confusion.” It’s unclear how many months or years it will take for it to be road-ready.
The removal marks an abrupt retreat for Tesla, which advertises “full self-driving hardware on all cars," even though its vehicles still demand a human remain in control of the car at all times. The company also offers an "Enhanced Autopilot” program that includes some limited driver-assistance features, such as keeping the car inside its lane at highway speeds.
Tesla critics have panned the company for taking customers' money for a technology that’s not ready for public use, and it’s unclear how the company will respond to customers who have already paid Tesla for the feature.
Safety advocates have said that Tesla’s marketing has had the dangerous result of confusing drivers about what the systems can actually do. A survey released Thursday by Thatcham Research, a U.K.-based automotive group, said that 7 in 10 drivers globally believed mistakenly that they could purchase a self-driving car today, with Tesla as the top brand involved in the misconception.
Sterling Anderson, a former director of Tesla’s “Autopilot” program and a co-founder of the self-driving car firm Aurora Innovation, said recently that the industry needs “to be more truthful about our capabilities."
A Tesla spokesperson said the removal was not reflective of a change in plans and was instead made to “streamline our purchase experience for customers.” Customers, the spokesperson said, could still preorder the option by special request.
But some Tesla analysts said the move seemed to reflect that the technology was further from reality than the company has suggested. Matthew Avery, director of research for Thatcham Research, commended Tesla for trying to dispel confusion about the technology but said much more could be done.
“They’re still selling a dream,” Avery said. “It would be tragic if people are crashing cars and thinking, ‘I really thought the system could do this.’”
Musk sparked a frenzy of customer reservations in 2016 when he said the Model 3 would cost $35,000 before incentives, such as a $7,500 federal tax credit — a price point that would help Tesla expand beyond its traditional core of well-heeled buyers. That model, however, remains delayed until 2019, the company said Thursday.
The surprise announcement, delivered via tweet to Musk’s 23 million followers, comes as Tesla seeks to steer attention away from a chaotic period in which Musk battled with critics, smoked marijuana during an interview and pledged that he had the money to take Tesla private — a promise for which he was sued by the Securities and Exchange Commission. That case was recently settled.
Musk agreed as part of the settlement to step down as the company’s chairman for three years, opening a prominent void that the company has yet to fill. But the announcement again highlights Musk’s enduring role as the company’s chief executive, designer and hype man.
Musk said Thursday the car would be sold via Tesla’s “super simple new order page,” which estimated that delivery for the mid-range model would take six to 10 weeks. That model, the company said, could go 260 miles on a single charge.
The only available Model 3 for the past year has been a long-range version, offered mostly at luxury prices. But Musk said a “truer cost of ownership” for the mid-range version would be about $31,000, his estimate for discounting the cost of gas.
The move could raise the pressure on Tesla’s already-straining California factory and its nationwide system built to deliver cars to customers, which Musk described last month as mired in “delivery logistics hell.”
“As Model 3 production and sales continue to grow rapidly, we’ve achieved a steady volume in manufacturing capacity, allowing us to diversify our product offering to even more customers,” a Tesla representative said in a statement.
The move could frustrate Tesla fans who put down a $1,000 deposit two years ago for what they thought would be a sleek electric sedan costing about $27,500 after tax incentives.
Tesla says the “standard battery” version will not be available for another four to six months. Musk has said the company, a cash-burning giant that faces billions of dollars in impending debts, must push out more profitable and expensive versions first: Shipping the cheapest “Model 3 right away [would] cause Tesla to lose money & die,” he tweeted in May.