It was only last month that Musk said a $35,000 version that could be sold profitably was perhaps six months away.
The electric vehicle 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 auto. Tesla stores will be "more like galleries and information centers", Musk explained.
Tesla is shutting down all of its retail sales operations, so if you want to buy its cars, you'll now have to do it online.
The firm managed to scrape a profit in the final two quarters of 2018, but Mr Musk said it expected to post a loss for the first three months of this year.
It said: "You can now buy a Tesla in North America via your phone in about one minute, and that capability will soon be extended worldwide".
Alongside its launch of the $35,000 Model 3, Tesla also said it was closing physical dealerships across the country and instead moving to online sales.
Trading of Tesla shares was halted around 4:58 p.m. ET ahead of the news.
According to The Verge, Tesla CEO Elon Musk said, "All sales will be online" on a media call this morning.
In a surprise announcement today, Tesla Motors just introduced its long-awaited $35,000 standard Model 3, a long-sought goal for the entire electric vehicle market that has proven elusive up until today.
The cheapest Model 3 on sale before Thursday was $42,900.
Company boss Elon Musk has long promised that the electric saloon would eventually be offered in a Standard-spec, and it is now available to order on the company's website, along with a new mid-range "Standard Range Plus" model created to bridge the gap to the current mid-range, long-range and Performance models.
In a note to investors titled "The $35k Model 3 - Genius or Desperation?", Bernstein's Toni Sacconaghi, Jr. noted that, "Given its seeming abruptness, it does not appear that yesterday's announcement was made from a position of strength".
The "Standard Range" model has 220 miles of range with a top speed of 130 mph and it goes 0-60 in 5.6 seconds.
As part of the settlement, Musk stepped down from his chairmanship role and he and Tesla agreed to pay $US20 million each in fines.
Even Musk seemed a little apprehensive on a conference call with reporters Thursday. "We are also making it much easier to try out and return a Tesla, so that a test drive prior to purchase isn't needed...you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free".