Tesla is set to see how its mass market sedan fares on the roads of Europe, with the Model 3 earning approval from the relevant authorities and the first batch of higher-priced variants now headed for its shores. The expansion coincides with a critical time for the electric car company, with CEO Elon Musk hopeful the new markets can help shore up revenues as new challenges emerge and old ones remain.
Tesla's long-promised US$35,000 Model 3 electric sedan, a vehicle it hopes will tempt typical car owners away from internal-combustion engines, remains a ways off. Musk said midway through last year that shipping the lower-cost version ahead of vehicles with higher profit margins would cause "Tesla to lose money and die," and it appears that is still the case around six months later. The cheapest Model 3 available right now carries a price tag of $44,000.
This doesn't appear to have hurt the car's popularity too much, however, with Tesla shipping almost 150,000 Model 3s in 2018 as it became the best-selling luxury vehicle in the US. But it faces some uncertainty heading into 2019, with US tax incentives for electric vehicles decreasing from $7,500 to a current figure of $3,750. This will be reduced to a comparatively miserly $1,875 from July 1 and then disappear entirely at the end of the year.
As Musk noted in an email to Tesla employees last week, this essentially makes the car more expensive, and will make replicating its profits in Q3 of last year a difficult undertaking. To that end it is laying off seven percent of its full-time staff, and hopes that by shipping higher-priced versions of its Model 3 to Europe and Asia, combined with increasing the production rate and engineering improvements, it can close the gap.
This follows the company breaking ground on a new Gigafactory in Shanghai this month, where it hopes to start producing Model 3s for the Chinese market by the end of the year.
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