(Reuters) - Tesla Inc said on Wednesday it was lowering the price of its Model 3 sedan for the second time this year, moves that come in the wake of Tesla losing a tax credit that made its cars more affordable for U.S. buyers.
The company is ramping up production of the Model 3 and trying to make it more accessible for mainstream car buyers. Tesla has also been cutting costs as it looks to turn in profits this year.
A U.S. federal tax credit began phasing out for Tesla in January, effectively raising the price of cars by $3,750. Tesla said on Tuesday it had cut the Model 3 price by $1,100, following a cut of as much as $2,000 in January.
That leaves the starting price of a Model 3 at $42,900, still substantially above the $35,000 price Tesla Chief Executive Officer Elon Musk originally promised.
Musk told a Twitter user that the company is “doing everything we can” to drop the Model 3 base price to $35,000, without credits. “It’s a super hard grind,” he wrote.
The billionaire in the past few months has been pushing for cost-cutting initiatives, like cutting jobs and ending a customer referral program. Tesla said in a statement that ending the costly referral program allowed it to cut the Model 3 price.
The referral program that ended at the beginning of February gave new buyers six months of free charging and prizes for existing owners such as launching personal photos into deep space or invites to a Tesla event.
Tesla delivered fewer-than-expected Model 3 sedans in the fourth quarter.
The Palo Alto, California-based company’s share were down 0.45 percent at $319.89 in premarket trading on Wednesday.
Reporting by Sanjana Shivdas and Subrat Patnaik in Bengaluru; Editing by Arun Koyyur and Saumyadeb Chakrabarty