RESOLVED: Make sure that you have "location services" for the Tesla App on your phone set to "always". On an iPhone, go into settings, privacy, location services and change the setting.
Mine stopped letting me start the car when I changed the location services settings to "while using". I didn't realize that was the cause until the thing stopped letting me drive except by using the card. I deleted the phone key on my model 3 (under "locks"), created a new key and set location services on the Tesla app on my phone to always, and the phone once again works perfectly to enter as well as drive the car.
The explanation on my phone under the Tesla app in location services says, "Tesla uses your location to show your proximity to your vehicle (while the app is open) and to optimize phone key on your supported vehicles (while the app is in the background)"
Hope that helps!