Tesla has announced that the price of its entry-level Model 3 in the US will drop to £26,400 ($35,000), keeping a promise it made to lower the price of its first mass-market car.

As a result of price drop, the Californian firm will shut down showrooms, and migrate to an online sales system. That will allow it to cut costs by five percent and in turn reduce prices across its range.

Tesla hasn't revealed which of its 378 service and retail locations across the world will close, nor how many jobs will be threatened by the impending closures.

Company founder Elon Musk isn't worried that the closure of actual showrooms will have an impact on sales, nor does he feel that being unable to offer test drives will be detrimental

"Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free," Musk said in a blog post.

Tesla's Model 3 is expected to finally arrive on European shores later this year, along with sales also beginning in Asia.

2018 Tesla Model 3

Costing about half the price of Tesla's other models, the Model 3 is Tesla's cheapest model. It got 325,000 orders in a week when it was first unveiled, but the damned ended up causing problems for the company, which struggled to meet production targets.

The all-electric saloon, which can reach 60 mph in just 5.6 seconds and on to a top speed of 130 mph has an estimated range of up to 220 miles while optional long-range batteries boost performance and range bringing the 0-60 down to 5.1 secs, the top speed up to 140 mph and the range to 310 miles. In the US the Model 3 has a four-year, 50,000-mile warranty with an eight-year, 100,000 guarantee on the battery.

Gallery: 2018 Tesla Model 3