The $35,000 Tesla Model 3 is finally here. It is sleek, quick as hell, and meant for the masses. And it is the most important car the company will ever build.
The Model 3 is the car Tesla Motors has promised since the company’s founding, the car that CEO Elon Musk is convinced will push EVs into the mainstream and the technology to an inflection point. Not to put too fine a point on it, it is the car Musk believes will change the world.
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The EV Race
“Tesla is hardly alone in hoping to [push the affordable EV agenda] and frankly, got beaten in the race to build a $30K EV wth a triple-digit range by General Motors. In January, the Detroit stalwart introduced the 2017 Chevrolet Bolt, a battery electric hatchback with a range of 200 miles and a price of 30 grand after the $7,500 federal tax credit.
Still, Musk isn’t the slightest bit worried and, to be fair, has little reason to be. The Bolt is lovely, but Tesla has a proven ability to get people excited, and there’s no denying the company has a cachet many automakers do not. You don’t often see people lining up outside dealerships simply to place a $1,000 deposit on a car they haven’t even seen.”
Tesla’s Game Plan
“[Improving its vehicles by] using over-the-air software updates to make every car even better. It made hardware changes, too, offering a second motor to provide four wheel drive, bigger batteries for more range, improved electronics, and self-driving capabilities. The 0 to 60 time plunged to a stomach-dropping 2.8 seconds—on par with six-figure exotics.
Tesla built an international network of 1,600 “superchargers” where owners can plug in for free and charge the battery to 80 percent in as little as 30 minutes. It fought for the right to sell cars directly to customers. It took over an enormous factory once owned by GM and Toyota. It broke ground on a “gigafactory” where it will work with Panasonic to build almost unimaginable numbers of batteries.”
The Model 3 Play
“For all Musk’s talk of disrupting the industry, Tesla Motors has been little more than a voluble pest. The company sold 50,580 cars last year. General Motors moves that many in a single weekend.
That explains how GM won the race to build the 200-mile, $30,000 electric car. It threw time and money and resources at a really hard problem—building an EV that delivers on those two metrics is no easy feat—and spent more than a decade solving it. And it relied upon the sprawling infrastructure and established supply chain that makes building and selling huge numbers of cars (relatively) easy.
And that is the world Tesla is entering with the Model 3.”
“The battery can account for one-third of the price of the car, but those costs are falling, fast. Between 2010 and 2015, the average cost per kilowatt hour (kWh) dropped 65 percent, from $1,000 to $350. By 2022 the unsubsidized total cost of ownership of battery electric vehicles will fall below that of an internal combustion engine vehicle.
Musk has said Tesla will use the car’s core structure as the basis for a series of vehicles, including a small crossover. It’s a common industry move, a way to amortize the infrastructure costs over more vehicles. And taking preorders will help Tesla gauge how many cars it needs to build, avoiding the risk of producing more stock than it can sell.
Selling cars isn’t Tesla’s only route to the bank. California is one of 10 states that require automakers to offer at least some zero emissions vehicles. Automakers can circumvent that mandate by buying “ZEV credits” from automakers who find themselves with surplus credits. Tesla, which has a surplus of credits because it only sells electric cars, earned $51 million selling spare credits in the first quarter of 2015 alone. Those credits are slowly losing value under the complicated regulations governing them, but selling a lot more cars should make up for that.
My 2 cents:
Far more exciting than how cool the Model 3 looks is what it stands for. Tesla’s future is contingent on the EV movement catching on. With each model, Tesla has sought to break down barriers; Can there be a market for EVs? Can EVs perform as luxury vehicles and now, can EVs be the future? The Model 3 is Tesla’s way of upping the EV ante: a mass consumed mass produced EV might, at last, help Tesla shoulder the financial burdens of generating EV infrastructure on its own. The plunging battery prices, pre-order data and ZEV play are key supplementary aspects to what could be Tesla’s largest upswing to date.