High Hopes Are Resting on Tesla’s Volume Selling Model 3

The culmination of Tesla Motors’ three-stage business plan established last decade will be kicked off in earnest at the March 31 revelation of the Model 3 in Los Angeles.

Tesla’s ambitions to revolutionize automobiles has centered around proving itself first with an upscale sports car, moving to a mid-priced luxury sports sedan, leading to an “entry level” car priced for “the masses,” establishing the company. The last American auto manufacturing startup to make it and stay in business was Chrysler, established 1925.

Tesla began with its Lotus-based Roadster in 2008. Just 2,450 of this quick, light, sports car were sold into 30 countries.

Next in line was the Model S that aimed for a starting price just under $50,000 after tax credit, and this sort-of happened, with a twist.

Launched June 2012, the Model S was priced less than the initially $98,000 Roadster, but a $57,400 40-kwh example (before $7,500 credit) was canceled due to too-few pre-orders. Today the Model S starts for $71,200 with rear-wheel-drive, 70-kwh pack, and loaded AWD 90-kwh examples can run to as high as around $150,000 and blow away the original Roadster in a sprint.

But the Silicon Valley company is about to graduate in a way from being primarily a boutique automaker. Its goal – after also launching the Model X crossover – was to follow a glide path downmarket toward an electric car capable of being afforded by far more people, and at long last, the Model 3 is nearly here and at less than half what a Model S starts at.

The Model 3 is thus to be the linchpin product hoped to propel total Tesla production including all models to as much as 500,000 units annually by 2020.

Model S. Although there is a major international auto show in New York next week, Tesla’s event at its Hawthorne Design Studio on the other side of the country is surely the highlight of the month, if not the year or decade, for its fans.

Although there is a major international auto show in New York next week, Tesla’s event at its Hawthorne Design Studio on the other side of the country is surely the highlight of the month, if not the year or decade, for its fans.

This aspiration was stated by CEO Elon Musk, who has said a half million vehicles per annum would be needed to become profitable.

To do it means Tesla – known for stretch goals already – will be reaching significantly farther than it yet has. Last year it sold less than 52,000 vehicles worldwide, the most in its more than 10-year history. This year it estimates as much as 83,000-93,600 including Model S and Model X.

Tesla says Model 3 won’t be delivered until 2017, and some observers are saying as Tesla has been late before, it will be again even with the 3.

Actually, it already is. While folks may dismiss utterances made in 2007 by former CEO Martin Eberhard who projected a $30,000 “Blue Star” in production by 2012, the Model E (now Model 3) was reported in 2013 as slated for a January 2015 unveiling in Detroit.

In any case, the Model 3 is about to be shown for the very first time, is expected to be delivered by 2018, and in the half decade between 2015-2020, Tesla is looking to balloon production as much as 10-times.

Thus the Model 3 must be the closest thing yet to a bread-and-butter car from the company that established itself as high-end brand. The Model 3 is however to be still relatively blue blooded not unlike how Mercedes-Benz makes S-Classes for upscale patrons and C-Classes for those of more modest budgets.

As such, it’s been reported as competition for the BMW M3, Audi A4, Lexus IS – if not also a nice C-Class – and the like.

We’re not talking Toyota Corolla or Honda Civic here – or even Chevy Bolt or Nissan Leaf, or so it is thought.

What We Might Expect

First up to be revealed this month will be a sedan, as Tesla’s invite graphic suggests and rumors and statements have long said. At a later date a crossover is expected to be revealed based on the same platform, and anticipated to be called Model Y.

To start at $35,000 before any available tax credit or incentives, the 200-mile-plus range EV will only be partially revealed, said Musk, but orders begin upon reveal.

“The first pictures of the Model 3 will be end of March” Musk said from Chambourcy, France. “I am being a little coy here, we are not gonna show everything about the Model 3 until a lot closer to production time.”

Estimated to be about 20-percent smaller than the Model S, it’s believed more steel will be used in its construction instead of aluminum to save costs.

Tesla_fremont_assembly

If rumors are correct, performance is to be within realm of the first Model S 85 Performance’s 0-60 time at maybe 4.1 seconds, while range will beat the Model S 60 at maybe 225-250 miles.

Whether a larger battery is offered optionally remains to be seen, as is true also of all-wheel-drive, and Autopilot semi-autonomous capability, but observers believe these are nearly assured sooner or later.

Just how fully developed the car is at this point is also unknown. Last October ChargedEVs reported Chief Technology Officer JB Straubel said most Tesla engineers were at work on Model 3 already.

“For better or worse, most of Model 3 has to be new,” said Straubel. “With the X, we were able to build on a lot of common components with the S, but with the Model 3 we can’t do that. We are inventing a whole new platform for Model 3. It’s a new battery architecture, a new motor technology, a brand-new vehicle structure.”

Giga_Factory1

To build the Model 3 will take batteries, lots of them, and that is what the Gigafactory aims to do. At full production volume it will make enough batteries for 500,000 vehicles annually – speaking of all models Tesla brings along.

The Supercharger network also is a huge perceived advantage, though what stipulations or option price may be attached to its access by Model 3 owners is another unknown.

Uncertainties further include the availability of the federal tax credit which begins to taper off after 200,000 plug-in vehicles sold – a number Tesla may be very near by 2018.

SEE ALSO: Tesla Owners Experience Two Hour Delays At Tejon Ranch Supercharger

Whether this law receives an extension, will be of great interest to EV watchers – not just for Tesla, but also for General Motors and Nissan, which may hit the number before or around the same time.

Speaking of which, Nissan’s next Leaf is to be ostensibly positioned against Chevrolet’s Bolt – and the Model 3 loosely, at least in the most important metric, 200-plus miles range and price in the $30,000s.

Of the three, many watchers are hoping Tesla’s design will be in another league as has been suggested.

Saint Patrick’s Day Lottery

Tesla said it has saved 650 places out of less than 800 total for the reveal reserved for Tesla owners, and these are to be selected by lottery.

To enter online, people must do so by March 16 before noon Pacific time. A random drawing will be made March 17, Saint Patrick’s Day.

If you are not one of the ones who gets in, the event will be live streamed as well.

SEE ALSO: Musk: Tesla Model 3 Reservations Start March 31 – (Just) $1,000 Required

Orders begin 10 a.m. March 31 with a $1,000 refundable deposit required.

The Model X – a much pricier car and which took from Feb. 2012 to late last year to be launched – accrued more than 30,000 reservations.

Among many questions remaining are whether the Model 3 reservations will stack up in record numbers, but more certain is Tesla is off and running.

Some have said the odds of massive growth while maintaining quality and service expectations for a lower demographic car may be among the biggest challenges it’s faced to date.

But Tesla was already beating odds, it’s gotten all the way here, and in less than two weeks it will reveal Model 3.

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