Tesla has lowered the price of its Model 3 by $1,100 amid reports that U.S. sales fell precipitously in January despite a $2,000 reduction that went into effect at the beginning of the month.

The Model 3 Mid Range now starts at $42,900 and features rear-wheel-drive and a range of 264 miles per charge.

The electric automaker has admitted that it is facing challenges to bring the price of the Model 3 down as it aims to offer a long-promised $35,000 version. Elon Musk promoted the new price cut on Twitter by pointing out that it brings the effective cost of ownership below that mark after federal tax credits and fuel savings over a similar gas-powered car.

“The demand for - the demand for Model 3 is insanely high. The inhibitor is affordability. It's just like people literally don't have the money to buy the car,” Musk during the company’s earnings call last week.

Respondents to a recent Consumer Reports survey gave the Model 3 the highest marks for customer satisfaction.

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InsideEVs estimates that Tesla sold 6,500 Model 3s in the U.S. in January, which would represent a more than 70 percent drop from the prior month. Tesla typically only releases global quarterly sales figures, but Musk acknowledged on the call that sales had weakened in January, in part due to a “pull forward of demand” to December by many customers looking to beat a 50 percent cut in the tax credit Teslas are eligible for that occurred at the end of 2018.

Musk also said on the call that the standard, shorter range $35,000 Model 3 may be available in the middle of this year, clarifying that it was a “rough, rough guess,” and that current production is almost entirely earmarked for upcoming deliveries to Europe and China.

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