Tesla Motors has unveiled its Model 3 electric car and started taking orders for the car, which comes with a lower price tag than previous models and is planned to reach much higher volumes.
Model 3 production is scheduled to begin in late 2017 with deliveries starting in North America (beginning on the West Coast). Europe and Asian markets will follow as regulatory requirements are fulfilled for different markets.
The Model 3 is the next step in Tesla’s mission to get EVs to mass market volumes. Tesla founder and CEO Elon Musk said his goal is to produce about 500,000 vehicles a year once production is up to full speed.
The five-seater Model 3 will come with a US$35,000 price tag and will be capable of 215 miles of range on a full charge.
Tesla currently produces two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle. The Model S commenced deliveries of Model S in June 2012 and as of December 31, 2015 Tesla said it has delivered over 107,000 new Model S vehicles worldwide.
Tesla commenced customer deliveries of Model X in the third quarter of 2015 and is currently ramping up production and deliveries of Model X in the US and plans to offer it in Europe and Asia in 2016.
Tesla plans to deliver 80,000 to 90,000 Model S and Model X vehicles in 2016.
Edmunds.com Director of Industry Analysis Jessica Caldwell highlighted the importance of the higher volume model and suggested the high level of interest from customers augurs well. “This has to be a first for the automotive industry: lines of people waiting to place an order for a car that won’t be available for over a year. This is the type of buzz that you see with Star Wars movies or new iPhones or even cronuts,” she said. “If there’s ever been any evidence that Tesla is primed to make the leap to mainstream car buyers, this is it. To be a full-fledged car company Tesla needs build volume and it needs to do it sooner rather than later. We may look back at today as a truly landmark moment for Tesla.”
Akshay Anand, analyst at Kelley Blue Book, also noted that Tesla’s new model is make or break. “We know that for many people, Tesla is as close as it gets to ‘more than a brand’ in the automotive space. Some consumers view it in the same light as an Apple, which is to say it’s almost like a lifestyle. With that said, the Model S and Model X have been inaccessible to most consumers because of their price points, as well as consumer concerns about range, EV infrastructure, etc. The Model 3 will aim to get Tesla into the mainstream, and undoubtedly will be the barometer for whether Tesla fails or succeeds (along with the gigafactory).”
Anand also noted that EV sales have been sluggish with cheaper gas prices and ranges that by and large don’t meet consumer needs. “Range will be critical on the Model 3, as well as out-the-door pricing. The Model 3 may start in the $30,000s with credits and incentives, but if consumers end up paying closer to $45,000 – $50,000 for it, that’s too much for a lot of people,” he said.
“If the Model 3 can be accessible in the $30,000s, it, along with the Chevy Bolt, could be just what the segment needs. Expect pre-orders to come in fairly strong, but Tesla needs reviews and acclaim to be strong out of the gate. If that happens, it needs to ensure consumers can actually get their hands on the vehicle and not go through an arduous ordering and waiting process. Production also will be critical, as we’ve seen Tesla battle with issues in this regard in the past. Regardless, this will likely be the most discussed and scrutinized vehicle over the next few years.”
Tesla posted a net loss of US$889m in 2015 on revenue of over US$4bn.