Tesla introduces new Model 3 at $45,000

The new version's battery has a shorter range and a price $4,000 lower than the previous starting price.

  • Tesla's new version of the Model 3 costs $45,000 and can travel 260 miles on one charge.
  • The Model 3 is the best-selling luxury car in the U.S.
  • Tesla still has yet to introduce a fully self-driving car, even though it once offered the capability as an option to be installed at a future date.

Tesla is now offering a cheaper version of its Model 3 sedan at a starting price of $45,000.

CEO Elon Musk announced the new version in a tweet on Thursday.

The Model 3 has been Tesla's lowest priced car since hitting the market in July 2017. As the best-selling luxury car in the U.S., the Model 3 had a starting price of $49,000 when it came with rear-wheel drive, though this version will soon become unavailable.

The new version of the Model 3 features rear-wheel drive and a 'mid-range' battery that can take drivers up to 260 miles on one charge, which is shorter than the 310-mile range of the 'long-range' battery. In the next three to six months, Tesla hopes to offer customers a standard battery model with a 200-mile range and a long-promised starting price of $35,000.

Dwindling tax credits for customers

Customers hoping to score a tax credit when buying the new Model 3 will likely be disappointed.

Tesla recently announced that only orders placed by Oct. 15 would be eligible for the $7,500 that used to accompany each sale. That's because federal law only allowed for the full tax credits until Tesla hit 200,000 sales, after which begins an 18-month phase-out process. The tax credits are scheduled to drop to $3,750 starting Jan. 1, to $1,875 on July 1, and then disappearing altogether by the end of 2019.

Full self-driving autopilot

In addition to offering the new mid-range Model 3, Tesla also recently removed the "full self-driving" option from its orders page. This capability isn't currently available in any model—customers were previously able to pay extra for the feature to be installed at a future date—though Tesla cars do have driver-assist capabilities.

"Please note that Self-Driving functionality is dependent upon extensive software validation and regulatory approval, which may vary widely by jurisdiction," reads the Tesla website.

Musk tweeted that this controversial option was "causing too much confusion."

The removal comes just days after Musk announced that a major upgrade to Tesla's Autopilot system will be available in about six months. (Autopilot is the system that uses cameras, sensors and GPS to automatically control Tesla vehicles.) The upcoming hardware update, which could bring a 500 to 2,000-percent increase in operations per second, will be free only to customers who chose to pay for the (somewhat deceptively named) "full self-driving" option at the time of purchase.

These customers will also be among the first to receive the full-driving capability when it does become available, though that almost certainly won't happen within six months.

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