Electric vehicle (EV) maker Tesla (TSLA) has stopped selling its cheapest variant of Model 3 in the U.S., the company’s website shows. The Model 3 Rear-Wheel Drive (RWD) Standard Range, costing $38,990, was the only model priced under $40,000, but is no longer available on Tesla’s order page. The news comes just when billionaire Elon Musk’s Tesla reported a 6.4% year-over-year increase in Q3 deliveries, which fell short of expectations.
The website now shows only three Model 3 variants offered for sale, including the Model 3 Long Range RWD (priced at $42,490), Model 3 Long Range All Wheel Drive or AWD (costing $47,490), and the Model 3 Performance (starting at $54,990).
Possible Reasons for Model 3 RWD’s Discontinuation
The Model 3 RWD used a China-made lithium iron phosphate (LFP) battery and had an estimated driving range of 272 miles per charge. These cheaper battery packs allowed Tesla to price the EV at lower rates. However, with the Biden Administration announcing enhanced tariffs on Chinese batteries and semiconductors, it could eventually lead to higher pricing of the Model 3 RWD.
Also, Tesla Model 3 RWD drivers were not eligible for any federal incentives since the batteries were made in China. With the dismissal of this model, Telsa now does not sell any EVs in the U.S. having any Chinese components. Musk could be envisioning using U.S.-made batteries for the Model 3 RWD, entitling it to incentives. This could be one of the biggest reasons for the model’s discontinuation.
Anyhow, the next Model 3 Long Range RWD EV is priced only a few thousand dollars more at $42,490 but has a higher driving mile of 363 miles per charge and is eligible for incentives.
Is Tesla Share a Buy or Hold?
Wall Street remains concerned about Tesla’s stock due to weak auto deliveries, declining margins, pricing pressure, and overall diminishing demand for EVs. Following the Q3 delivery numbers yesterday, five analysts kept their Buy ratings on TSLA, four analysts reiterated a Hold rating, while one analyst retained a Sell rating on the stock. The ratings display a divided view of Tesla stock as it navigates through the current challenges.
Overall, TSLA stock has a Hold consensus rating on TipRanks based on 12 Buys, 16 Holds, and seven Sell ratings. The average Tesla price target of $210.91 implies 15.3% downside potential from current levels. Meanwhile, TSLA shares have gained nearly 48% in the past six months.
