Will Tesla's Model 3 bring electric vehicles into the mainstream?
Tesla's newest car, already gathering pre-orders in advance of Thursday night's official reveal, could be the best chance to make electric cars affordable.
Smartphone releases and Black Friday sales aren’t the only events that can draw dedicated, over-enthused customers willing to camp out to be first shopper in line.
Pre-orders for Tesla’s latest car opened Thursday morning, for customers who visit a local Tesla store – and aren't afraid of long lines. For $1,000 down, customers are reserving ... what, exactly?
The Model 3's details won't be revealed until the official unveiling on Thursday night, during an exclusive premier in Hawthorne, Calif. But the car has already generated huge amounts of buzz, as many expect it to be the car to bring premier electric vehicles to the masses – in line with Tesla CEO Elon Musk’s master plan.
"The goal of Tesla has always been to have a three-step process where version one was an expensive car and low volume, version two is medium prices, medium volume, and version three would be low priced, high volume," Elon Musk said during a TED Talk in 2013. "Whenever you’ve got really new technology, it generally takes about three major versions in order to make it a compelling mass market product."
Accordingly, Tesla started with the Roadster, an electric sports car, in 2008, which retailed for more than $100,000 for the base model. The company then released two medium priced, medium volume cars – the Model S and Model X, with base models selling for about $70,000 and $80,000 respectively.
And now it's time for the mass-produced, affordable car: the Model 3.
Tesla has revealed a few teaser details about the new car. Customers know it will be about 20 percent smaller than the Model S, the battery will last at least 200 miles per charge, and even the base model will likely come equipped with the hardware needed for autonomous driving software later, according to Bloomberg.
Customers also know that the base price is set at $35,000, though the actual cost is a little less clear.
Tesla’s electric car models currently benefit from a federal tax credit that could lower the price by as much as $7,500, and additional state credits could push the price even lower.
But gambling on tax incentives could be risky. The federal tax credit fades out after a manufacturer sells 200,000 eligible car models. Depending on how many cars Tesla sells by the time the Model 3 enters production, currently scheduled for the end of 2017, the tax incentives might no longer be available by the time many pre-orderers make a full purchase.
Additionally, many customer favorites – all-wheel drive, longer-range batteries, and autopilot features – are all added costs above the base price on the Model X and S and will likely be the same for the Model 3.
Increasing the price uncertainty is the role of market pressure. Rock-bottom gas prices give consumers less incentive to adopt electric vehicles, and devout early adopters will still have their attention split between competitor vehicles like the Chevrolet Bolt and Hyundai Ioniq.
Tesla’s stock reached a high in July 2015 of $280, but suffered from a bad fourth quarter. Prices bottomed out at around $142 on Feb. 9, 2016 and have been on the rise since.
The fluctuation has caused speculation that Tesla needs Model 3 to be a hit with car buyers. That could be a tough sell in the US, where IHS Automotive estimated that electric vehicles accounted for less than 1 percent of the market in first-quarter 2015.
But some supporters and analysts remain optimistic.
"This is a game changer for Tesla," said George Peterson, president of data analysis firm AutoPacific, to USA Today. "They have gone against all the norms."