Tesla announced major changes to its model lineup Thursday, especially the Model 3, in an effort to shore up sales.

After the federal tax credit available on its cars halved Jan. 1, Tesla has dropped prices, added features, streamlined its model lineup, and introduced new lower-priced options for the Model 3, including the long-promised $35,000 base Model 3 Standard Range. The company announced Thursday that it will not produce that base car, but will fulfill orders for it with software limited versions of the Standard Range Plus, with 10 percent less range and several features disabled that can be purchased by owners later.

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It also removed the base Standard Range from its ordering options. Buyers who want it will have to special order it at store locations or on via phone. Tesla said orders for the Standard Range Plus, with 240 miles, a premium stereo, power seats, and upgraded upholstery, outnumbered orders for the base car by 6 to 1.

Tesla Model 3 dashboard in Autopilot testing with IIHS [CREDIT: IIHS]

Tesla Model 3 dashboard in Autopilot testing with IIHS [CREDIT: IIHS]

The new special-order Standard Range will have about 216 miles of range and won't have Tesla navigation, heated seats, and streaming music. Standard Range cars can be upgraded to Standard Plus cars at any time, but Tesla didn't say how much that would cost. Similarly, owners of Standard Plus cars who want to downgrade to Standard cars will get a refund from Tesla, but it's unclear how much that would be.

The good news for Standard Range Model 3 buyers is that they will now get synthetic leather upholstery and power seats that their cars were not expected to have. Tesla said it will begin delivering the cars this weekend.

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The move mirrors how Tesla handled orders for the short-lived base 40-kwh Model S in 2012.

The effective base price of a Model 3 ordered online is now $40,700.


To make the car more affordable, Tesla also announced that it will offer leases on the Model 3. Tesla has long offered leases on the Model S and Model X, but CEO Elon Musk said in sales call in January that the company needed to be in a stronger cash position to carry Model 3 leases on its books.

The Model 3 Standard Range Plus will lease for $504 a month, with $3,000 down for 36 months, with 10,000 miles per year. There's a caveat: Lessees can't buy out their cars at the end of the lease. Tesla says it plans to use Model 3s returned from leases in its new planned self-driving ride haling network, which may indicate that the service could start in three years or less.

Lessees can choose leases at 10,000, 12,000, or 15,000 miles per year.

Autopilot standard

To attract buyers at higher price points, as well as to enable this future ride-hailing service, Tesla also announced that it will make Autopilot standard. Autopilot includes active lane control and adaptive cruise control to follow cars ahead and steer into its lane. It no longer includes the company's Navigate on Autopilot feature, which is now part of the Full Self-Driving Capability option.