Tesla cuts Model 3 price for second time this year

(Reuters) – Electric carmaker Tesla Inc said on Wednesday it is lowering the price of its Model 3 sedan by $1,100, citing the end of a costly customer referral program.

The second price cut this year brings down the cost of its least expensive variant to $42,900, according to the company’s website.

The starting cost of the Model 3 is now about $35,000, after about $8,000 of credits and fuel savings, Tesla Chief Executive Officer Elon Musk tweeted.

In a reply to a Twitter user asking about when Tesla would drop the Model 3 base price to $35,000, without credits, Musk said, “We’re doing everything we can to get there. It’s a super hard grind.”

Tesla ended its customer referral incentive plan on Feb. 1 after Musk tweeted that the referral program was “adding too much cost to the cars, especially Model 3”.

Tesla delivered fewer-than-expected Model 3 sedans in the fourth quarter and cut prices for all its vehicles in the United States to offset a reduction in a green tax credit.

The company is rapidly ramping up production of its Model 3 sedan and lower prices could help it reach a broader customer base than its pure luxury vehicles.

When asked about lower prices in Europe, Musk tweeted that the value added tax of about 20 percent and import duties of about 10 percent usually result in a 30 percent higher cost in Europe.