Tesla Shifts Gears, Won't Sell $35,000 Model 3 Online

The announcement comes after reports of delayed delivery for those buyers who purchased a Model 3 SR—78 percent of which were online sales—and there have been multiple reports of buyers being contacted by Tesla sales representatives attempting to convince them to upgrade to more premium features.

To date, not a single Tesla Model 3 SR has been delivered as far as anyone can tell. The vehicle Tesla will now be delivering to Model 3 SR buyers will be a somewhat different vehicle, though arguably better, than the one they initially ordered.

Originally, the Model 3 SR had a range of 220 miles, cloth interior, manual seats, among other cost-saving modifications. Now, customers will receive the Model 3 Standard Range Plus model, which features a more premium interior and a battery with a software range limitation.

Given these developments, as well as the well-documented production and delivery difficulties, there is a real question about whether Tesla was ready to offer the Model 3 SR when they did and why they chose to announce a vehicle model they don’t seem to be able to deliver.

Besides the potential need for some good press, there are certainly other reasons why Tesla would feel pressure to deliver on its own self-imposed goal of a $35,000 Model 3 right now as opposed to later this year or even next year.

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As The Verge pointed out a few weeks ago, last year Tesla passed the threshold of 200,000 cars sold in North America, meaning the US Federal Electric Vehicle tax credit that helped offset the cost of the vehicle is beginning to phase out. American buyers will only get a tax credit of $3,750 for the next couple of months before the credit drops to $1,875 for the remainder of the year. After December 31, no credit will be given to Tesla buyers. The longer the delay in purchase and delivery of a $35,000 electric vehicle, the less customers will receive in incentives, upping the real cost of the vehicle for the buyer.