Tesla has said it would not be profitable in the first quarter, as it offered for the first time a $35,000 version of its Model 3 sedan.
The company also said its global sales would now be online-only, steps designed to increase demand and cut overhead costs for the electric vehicle maker.
Chief executive Elon Musk's warning on profit during a conference call with members of the media and contrasted with Tesla's statements last month that it was expecting a "very small" net profit in the first quarter.
Investors have voiced concerns about whether Tesla would be able to maintain profit margins through cost cutting – such as recent layoffs – as it reduces prices of its newest vehicle.
Still, the price drop could quell concerns from some analysts that demand for the higher-priced versions of the Model 3 was beginning to dry up in the US, especially after a federal tax credit was cut in half this year.
Musk has often shared that his strategy for Tesla was to build higher-priced cars – the Model S and X.
Their success would ultimately usher in a $35,000 mass-market car, followed by an SUV, the Model Y, which is currently in development.
But customers who reserved the Model 3 at that lower price have waited nearly three years since Musk first promised it.
An online-only sales strategy, along with other changes, would allow vehicle prices to fall by about 6% on average, Tesla said in a blog on its website.
Over the next few months, Tesla will wind down "many" of its stores, while investing in its service system, it said.
Online-only sales represent a dramatic shift for the company that has prided itself on its boutique retail stores.
In June 2017, Musk pledged to increase the number of stores, saying they had "barely touched the surface" of what was possible.
As of the fourth quarter, Tesla said it recently opened 27 new locations, bringing its total of stores and service centres to 378, including one in Dublin.
This was the third time this year that Tesla lowered the price on the Model 3, which recently started at $42,900.
The new $35,000 version has a top speed of 130 miles per hour (209 km per hour) and can go from zero to 60 mph in 5.6 seconds, Tesla said.
For $2,000 more, Tesla offers a version with a range of 240 miles (386 km) and a top speed of 140 mph.
A $35,000 Model 3 is a major shot in the arm for Tesla sales during a period of major challenges, including deliveries of the Model 3 to Europe and China and construction of a factory in Shanghai.
Musk declined to answer a question on what the profit margins of the $35,000 vehicle would be, according to the New York Times. Gross margins on the car were above 20% in the fourth quarter.
As part of cost-cutting efforts, Tesla last month reduced its full-time headcount by 7%, following a similar cut of 9% to its workforce last June.
The price cut on the Model 3 comes three days after renewed tensions between Musk and US Securities and Exchange Commission.
The agency petitioned a judge this week to have Tesla's CEO found in contempt of an October settlement between the parties.
The SEC accuses Musk of having made material statements about production levels on Twitter without first having them vetted internally.
That settlement between Musk, Tesla and the SEC concerned Musk's August Twitter post in which he claimed to have "funding secured" to take Tesla private at $420 per share.