Tesla Changes Price Structure With Mid-Range Battery Model 3
Tesla (NASDAQ:TSLA) has surprised the market with the introduction of a new Model 3 with mid-range battery for $45,000, according to a report on Electrek. TSLA stock was up 1.2% in pre-market trading at 4:17 EDT this morning. The shares fell 2.9% yesterday.
According to the electric vehicle (EV) news website, the battery on the rear-wheel-drive model has a range of 260 miles, 50 miles less than the long-range battery in the more-expensive Model 3. That model has been available for more than a year, with the long-range battery pack promising 310 miles of driving on a charge. Sans options, the car started at $49,000. Tesla has long promised a $35,000 base version was coming soon.
The new model could be provide a boost for TSLA stock, which has lost 16% in the past three months. Earlier this week, InvestorPlace contributor Luke Lango commented that “the stock needs a catalyst to reverse sentiment and get it back on an uptrend. That catalyst won’t arrive until the third-quarter earnings report. Thus, the best game-plan is to accumulate on dips towards $250, and wait for the Q3 report.”
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Reuters noted that the launch of the new model comes as U.S. tax breaks for Tesla cars are about to decrease. In July, the company confirmed that it hit the 200,000th U.S. delivery threshold, which triggered the federal tax credit phase-out period. Buyers will lose the full $7,500 credit by the end of the year unless the law is changed, hitting $3,750 for the first half of 2019 and $1,875 in the second half of 2019.
Of the 1.3 million EVs delivered last year, over 100,000 were Tesla cars, giving Tesla 8% share. Lango noted that Tesla will have a tough time growing share with rising competition, but it is reasonable to project 7.5% at scale given Tesla’s first-mover’s advantage and leading brand. A 7.5% share on 24.15 million EVs implies 1.8 million Tesla deliveries in 2030.
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