Tesla announced a series of changes to its vehicle lineup today, including moving away from the long-promised base Model 3 at $35,000 and an increase in price across the lineup that comes with Autopilot becoming standard.
Recently, we reported that Tesla’s $35,000 base Model 3 still doesn’t exist a month after launch and Tesla was being weird about it.
Today, Tesla announced that it will remove the Standard Range option for the Model 3 from the online configurator.
For those who already ordered it, Tesla is going to deliver the Standard Range Plus option and software limit the battery pack.
Tesla says that people will still be able to order the vehicle as an “off-the-menu” item for the time being. Both the Standard Range and Long Range Rear Wheel Drive will be available only by calling or visiting a Tesla Store and asking for them specifically – quite a departure from Tesla’s former plan to move to online-only ordering.
They wrote in a new blog post;
“Given the popularity of the Standard Plus relative to the Standard, we have made the decision to simplify our production operations to better optimize cost, minimize complexity and streamline operations. As a result, Model 3 Standard will now be a software-limited version of the Standard Plus, and we are taking it off the online ordering menu, which just means that to get it, customers will need to call us or visit any one of the several hundred Tesla stores.”
Tesla says that deliveries of the software-limited Standard Range Plus Model 3 vehicles will start this weekend for those who ordered the Model 3 Standard Range last month.
The automaker justifies the move by claiming that Model 3 Standard Range Plus – which is currently available – was outselling the Standard Range version – which is not yet available – by more than 6 times.
On top of this change, Tesla announced that it is making the Autopilot package standard across the entire lineup.
It results in a price increase on the base price, but the automaker says that buyers will get more value.
“All Tesla vehicles now come with Autopilot bundled as a standard feature for less than the prior cost of the option. For example, Model 3 Standard Plus used to cost $37,500, plus $3,000 for the Autopilot option. It now costs $39,500, with Autopilot included.”
Along with this announcement today, Tesla also launched Model 3 leases and said that it will keep cars for its autonomous Uber-like service after the lease terms.
While the base Model 3 isn’t completely “dead” – after all, those who have already ordered it can still get a software-locked car delivered – the facts that the standard interior never existed and the standard pack has never been produced, and the car has been removed from the website, mean this model has been effectively killed.
We asked Tesla to comment on how long this configuration will be available “off-menu,” and they declined to provide more details. There is also no information about whether the same deal will be available for orders outside the US.
Tesla has done a similar thing before. After years of promising a 40kWh Model S at a base price of $50,000 (after tax credits), Tesla killed the base Model S and offered a select few holdout reservation holders the option to buy a software-locked 60kWh car.
In that instance, Tesla sold cars with more expensive configurations first, and convinced many customers to step up and purchase a more expensive vehicle than they otherwise would have, since they were unsure when (or even if) the base model would ever be available. After getting as many people to buy a higher option level as possible, Tesla used the justification that “nobody wants to buy” the base model car. But it’s hard to want to buy a car that doesn’t exist, and that you actively anti-sell.
This situation is better for customers in some ways, as Tesla says they will keep the Standard Range Model 3 available “off-menu,” but we don’t know how long. And those who order the Standard Range are still getting upgraded interior materials, which is nice, for only a minor drop in range (though, with a larger battery pack, this should mean these cars have better long-term battery pack health). Also, while the price difference between the 40kWh and 60kWh Model S was $10,000, the difference here is significantly smaller.
But it’s worse in other ways, because while the 40kWh decision was one change. In contrast, this change comes after more than a month of chaotic changes in pricing, option availability, production, staffing, and sales strategy. Many of these changes left loyal customers feeling jilted. These changes were all justified by saying they were necessary to facilitate the production of the $35,000 Model 3.
Now, after all that chaos, here we are, and the Model 3 has a base price of $39,500 for all intents and purposes. Had Tesla just made this simple change a month ago, perhaps it could have spared itself from its well-earned reputation for capriciousness. Companies miss the mark from time to time, but it’s better to admit it instead of putting your customers and employees through so much confusion. We hope that Tesla, moving forward, can be a little more deliberative about their decisionmaking processes, and avoid situations like this in the future.
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