Tesla is finally ready to offer a version of its Model 3 sedan with a starting price of $35,000.
The company on Thursday began accepting orders for the lower-priced version, with delivery in two to four weeks. It said the base Model 3 would have a range of 220 miles before needing a charge, and would come with a different interior than pricier versions of the car.
The new offering is a milestone for Tesla, whose chief executive, Elon Musk, has long promised a $35,000 model. But the company has struggled to reduce costs enough to be able to sell such a car.
“This has been something we’ve been working toward since the beginning of the company,” Mr. Musk said in a conference call with reporters. “It has been insanely difficult.”
The automaker also began selling a Model 3 version with a range of 240 miles and a starting price of $37,000. Previously, the cheapest Model 3 sold for about $43,000 before tax incentives.
Tesla reported profits in the third and fourth quarters of 2018 as it ramped up production of the Model 3, its most affordable car. But sales appear to have softened this year. A federal tax credit of $7,500 that was available on Tesla cars last year was halved on Jan. 1. The credit will be reduced to $1,875 in July and will be eliminated next year.
Mr. Musk has long said Tesla needs to offer a $35,000 car to attract mainstream buyers who may be skeptical about electric vehicles because of cost, charging time and other reasons. A larger customer base would also allow the company to achieve the economies of scale Tesla needs to produce steady profits.
Mr. Musk declined to discuss what profit margin the company expected on sales of the $35,000 Model 3 but said Tesla would not make money in the first quarter. “Given that a lot is happening in Q1, we do not expect to be profitable in the first quarter,” he said. But he added that the company expected to return to profitability in the second quarter.
The company’s stock fell more than 3 percent in extended trading on Thursday.
Mr. Musk also said the company was now only taking orders online, and would close some showrooms and reduce its work force. “There’s no other way for us the achieve the savings for this car to be financially sustainable,” he said.
He declined to say how many reservations the company still had from customers who had expressed interest in buying a Model 3. Last summer, Tesla had more than 400,000 orders for the car. “The reservation list doesn’t matter,” Mr. Musk said.
Mr. Musk also expressed little certainty about how much demand the company is seeing for the Model 3. “My gut feel is 500,000 a year,” he said. But he added: “I don’t know what demand is. We’ll see.”
To put buyers at ease about making such big-ticket purchases on the internet, he said, customers will be allowed to return cars for a full refund within seven days as long as the cars have not been driven more than 1,000 miles.
“It’s going to be super easy to get a refund,” he said. “People should not have concerns about placing an order.”
The $35,000 Model 3 is likely to bring more customers to Tesla at a time when it is struggling to serve the affluent buyers it already has, said Karl Brauer, executive publisher at Cox Automotive. Some Tesla owners have complained about long waits to have cars repaired.
“Tesla’s biggest challenge going forward will be meeting production volumes and demand while maintaining timely service for a rapidly expanding customer fleet,” Mr. Brauer said.
Customers and reviewers have also raised questions about the Model 3’s quality and reliability. Consumer Reports said last week that it could no longer recommend the car after readers reported cracked windows, chipped paint and problems with the car’s touch-screen display.
The latest news comes as Tesla is facing several challenges. On Friday, the company is supposed to pay bondholders $920 million, a sum that would consume a quarter of its available cash.
To conserve cash, Tesla last month laid off 7 percent of its work force, its second significant layoff in the last eight months. It had $3.7 billion in cash at the end of December. In total, Tesla has about $11 billion in debt. The company must pay off $566 million in notes in November and a $1.1 billion credit line in June 2020.
The company is hoping to build a plant in Shanghai but still has to secure funding.
Mr. Musk has also created more legal trouble for himself. On Monday, the Securities and Exchange Commission asked a federal court to hold him in contempt for violating a settlement that he and Tesla reached with the commission last year.
The commission said Mr. Musk had not sought approval from company lawyers, as required by the agreement, before making a sales prediction on Twitter last week that varied from previous announcements.
Mr. Musk and Tesla reached the settlement with the S.E.C. after the commission accused Mr. Musk of violating securities law with a post on Twitter. In that message, sent in August, he claimed to have “funding secured” to take the company private at $420 a share. It was later revealed that he was referring to a much more embryonic proposal than he had implied.