The make-or-break $35,000 sedan could propel Tesla into profitability and reshape attitudes towards electric cars, or stumble on production glitches.
FREMONT, Calif. — If the gleaming Model 3 rolling out of the Tesla factory here Friday could ask its maker a question, this one would be apt.
“Will I be the next Ford Model T, the spark of a new transportation revolution, or the Ford Edsel, a misfire consigned to the annals of automotive history?”
Tesla CEO Elon Musk is sure of the answer.
“The whole point of Tesla was to build a great affordable electric car, ” Musk said at gathering of employees and a few dozen media for the rollout of the first Model 3 cars. “That’s what this day means. I’ m confident it’ ll be the best car in its class, gasoline or not, hands down.”
Certainly a lot rides on the Model 3’s tires. Tesla has become a cultural touchstone on the back of its fast and expensive $69,500-and-up Model S and X electric sedans, but with the $35,000 Model 3 it hopes usher EVs into the mainstream while turbocharging its production numbers to calm investors.
Currently, Tesla produces around 100,000 vehicles per year, all Model S and X. Now with the Model 3, it hopes to ramp up to 600,000.
Tesla’s stock continues to soar despite questions about profitability, rocketing to $334 from $235 in the past 12 months. But some analysts aren’ t sure Model 3 can be Tesla’s savior.
“The make-or-break part of this for Tesla isn’ t the production numbers, it’s the profitability and ownership experience issues, ” says Karl Brauer, executive publisher at Autotrader and Kelley Blue Book.
“If one or both are off, it’s big trouble, ” he says. “It’s tough to be a company that specializes in EVs, as they’ re only 1% of market and most electric cars aren’ t profitable for their companies.”
Musk seemed well aware of the challenges ahead, notably an initial factory break-in period. There are around 10,000 parts that make up a Model 3,70% of which are made in North America. The CEO suggested that suppliers held the key to the Model 3’s smooth launch.
“It’s an amazing car, but we’ re going to go through six months of manufacturing hell first, ” he said. “Production will move as fast as the slowest parts (supplier) .”
There’s evidence that the Model 3 should be easier to make, which perhaps could mean fewer quality issues that were the bane of Tesla’s first two technologically complex models.
The Model 3 features only one central screen in the middle of its dash, as compared to two in the S and X. The car is built from steel and aluminum, as opposed to the more complicated all-aluminum construction of its more expensive siblings. Initial models will not be available with complex four-wheel-drive mechanicals, just rear-wheel-drive. Its door handles do not automatically retract but instead are manually operated.
“There’s nothing in that car that doesn’ t need to be there, ” Musk said. “As we gain confidence with the production rate, we’ ll add increasing amounts of complexity.”
Musk was on hand to deliver the first 30 cars to employees, who critically will serve as guinea pigs for the production team looking to ferret out quality issues.
Whereas many owners of Model S and X sedans likely have other cars, the Model 3 is aimed at a market where repair issues could leave owners stranded. There could be a concern that if early owners report problems, those on the wait list could cancel their orders.
Musk is unconcerned. “Have you ever seen an ad for Model 3?” he said. “There are no discounts. If we did anything other than try and put brakes on demand, it would go bananas.”
Another factor that Tesla has to contend with is that it has around 79,000 of its 200,000 federal rebates left, meaning future Model 3 buyers would not be able to recoup $7,500 — a significant incentive on a $35,000 car.
Around 500,000 people have put down a $1,000 deposit for a Model 3. Customer cars should start rolling out toward the end of the year. Anyone ordering a Model 3 today would receive it by the end of 2018, Musk said.
This initial enthusiasm makes the Model 3 a potential “lynchpin for the electric movement, ” says Jessica Caldwell, senior analyst at Edmunds.com. “It could be the car that forces people to finally consider this as a very real option.”
Other automakers have tried to excite consumers with models such as the BMW i3 and Chevy Bolt, which are priced similar to the Model 3. But EVs remain a tough sell.
Caldwell says the Model 3’s appeal has to be strong enough to convince urban dwellers to hook up battery chargers and consider range when planning a trip. She adds that communicating with consumers on long lines also will be important.
She says her own company has a Model X, and “we’re on a priority list for a Model 3, but we haven’t heard anything about where we are in the queue.”
The Model 3 will initially be offered in two iterations: a $35,000 base model offering 220 miles of battery range, a 130 mile-per-hour top speed and a zero-to-60 mph time of 5.6 seconds; and a $44,000 version with 310 miles of range, 140 mph top speed and 5.1 seconds to 60 mph.
In a short test drive, the Model 3 seemed to deliver on its promise of being a baby Model S, boasting snappy acceleration and a high-tech interior. A single 15-inch touchscreen is the only piece of hardware on the dash, harboring all of the car’s controls. The car has a normal if not large trunk, and not a lift-gate like its bigger cousins.
Ultimately, Musk is an entrepreneur who launches businesses as a way to hold sway over issues that concern him, including space travel (rocket maker SpaceX) , traffic (The Boring Company, which is exploring the notion of tunneling under cities) and climate change (solar power provider SolarCity and Tesla) .
For him, Model 3’s success isn’ t just critical to his company’s fiscal health, but also to that of a planet grappling with a warming atmosphere.
“It’s a great day for Tesla, one we’ ve been working towards it since the beginning of company, ” said Musk.
