New York (CNN)Tesla has long promised a pared-down version of its Model 3 sedan that would be $35,000.
The electric car company announced Thursday, more than a year after Tesla began delivering Model 3s, that price point is finally available — but CEO Elon Musk said the company will have to close stores and lay off workers in order to make it financially sustainable to produce the cheaper car.
The Model 3 is "excruciatingly difficult" to make at the reduced price, Musk told reporters on a conference call.
The base model will have 220 miles of range, a top speed of 130mph, the company said in a blog post.
Tesla has long promised a pared-down, more affordable version of its Model 3 sedan.
"This is an important milestone for Tesla," Jessica Caldwell, executive director of industry analysis at Edmunds, said in statement. But she also cautioned it "might be too little too late," considering federal tax credits for Tesla-made EVs were slashed from $7,500 to $3,750 at the beginning of the year.
"If this model had come out when the Model 3 first launched and passion for Tesla was at its peak, shoppers might have given more latitude," Caldwell said. "But the expectations have been set and it's likely going to be a tough sell moving forward."
Tesla (TSLA) also said that it's introducing a new version, called the "Model 3 Standard Range Plus," which will give an extra 20 miles of range and an additional 10 mph to the top speed. Its price will be $37,000 before incentives.
The cheapest Model 3 on sale before Thursday was $42,900.
Tesla's website on Thursday briefly halted online orders for its Model X, Model S and Model 3 vehicles. Those order pages were automatically redirected to a landing page that referenced the upcoming announcement, saying "Great things are launching."
To achieve the $35,000 price tag, Tesla said it was closing stores and shifting sales worldwide to online only. It was also changing its return policy, allowing customer to bring back a car within 7 days or 1,000 miles for a full refund.
Tesla declined to say how many of its stores will close or how many jobs will be affected. Musk said a "small number of stores in high-traffic locations" will remain open as galleries and information centers.
When asked by a reporter whether he anticipated Tesla will turn a profit during the first quarter of 2019, Musk said it isn't likely — but Tesla could be in the black by Q2.
Karl Brauer, executive publisher at Kelley Blue Book and Autotrader, said in an emailed statement that the lower price "along with the new flexible online ordering process, should substantially widen the Model 3's appeal."
"Tesla's biggest challenge going forward will be meeting production volumes and demand while maintaining timely service for a rapidly-expanding customer fleet," Brauer said. "If Tesla can do this it will have successfully transitioned from a boutique automaker with a niche audience to mainstream brand serving mainstream consumers."
Tesla had a rough 2018 after months of manufacturing hangups and delays rolling out the Model 3. But the company surprised investors by posting back-to-back quarterly profits at the end of 2018.
But it hasn't all been good news: Tesla announced it was laying off about 7% of its full-time workers in January.
Last week, Consumer Reports also pulled its recommendation of Tesla Model 3, citing reliability issues with the car.
Tesla pointed to its overall customer satisfaction rating from the magazine and said it has corrected many of the problems found in the survey.
"We take feedback from our customers very seriously and quickly implement improvements any time we hear about issues," the company said, adding "we are already seeing a significant improvement in our field data."
Musk teased the Model 3 announcement on Twitter on Wednesday as regulators continued to scrutinize his use of the social media platform.
He caused a stir by posting a cryptic message about the impending announcement, which caused Tesla's stock to jump about 5% on Thursday. The company's shares were down about 3.6% after hours.
Musk is in hot water with the SEC about his tweeting habits.
Regulators on Monday had asked a federal judge to hold Musk in contempt for violating a settlement deal reached last year that involved criticism of Musk's Twitter use.
