Electric carmaker Tesla said on Wednesday it was cutting the price of its Model 3 Sedan for the second time this year, Reuters reported, a move that came after Tesla lost a tax credit, making its cars more affordable for buyers in the United States.
Tesla has been reportedly ramping up Model 3 production and trying it to be more accessible to the mainstream car buyers. In addition, it has been cutting costs as it appears to turn in profits this year.
Last month, a U.S. federal tax credit started phasing out for the company, effectively increasing the car prices by nearly $3,750. As reported in Reuters, Tesla said on Tuesday that it had lowered the price for Model 3 by $1,100, following a cut of as much as $2,000 a month earlier. It leaves the starting price of Model 3 Sedan at $42,900, still significantly above the originally promised $35,000 price by Tesla’s CEO Elon Musk.
Musk said that Tesla is doing everything to lower the base price of Model 3 to $35,000, without any credit. He tweeted ‘it is a super hard grind.’
In the past few months, the flamboyant billionaire has been targeting for cost-cutting initiatives including ending a customer referral program and cutting down the staff count. Musk also announced that Tesla would reduce the workforce by around 7 percent, considering the challenges it faces making the cars affordable without compromising the profitability.
The company wrote in a statement that ending the expensive referral program enabled Tesla to lower the price of its Model 3 Sedan. The referral program ended early this month which previously offered new buyers six months of free charging and prizes for current owners including invites to a Tesla event or launching personal photos into the space.
In the fourth quarter, Tesla delivered fewer-than-expected Model 3 Sedans.
Shares of the California-based company fell 0.45 percent in premarket trading on Wednesday, closing at $319.89.