Tesla Motors has unveiled a concept of its mass market Model 3 car, which it hopes will usher in the electric vehicle revolution.
The Tesla Model 3, expected to reach the market at the end of 2017, will sell from £24,000, which is less than a half of the price of the cheapest version of Tesla’s flagship Model S.
Essentially a downsized and simplified version of Model S, Model 3 will offer a driving range of 350 km and acceleration from 0 to 100km/h in about six seconds.
Tesla Motor’s CEO Elon Musk unveiled the concept car during an event in Hawthorne, California, at the headquarters of another of his companies, SpaceX.
Reservations for Model 3 began on 31 March and Tesla said more than 130,000 pre-orders were received during the first hours.
The grill-less sedan showcased during the event will compete with similarly priced luxury combustion engine powered vehicles such as Audi A4 and BMW 3-Series, as well as the upcoming electric Chevrolet Bolt EV from General Motors.
The car, which features a panoramic glass roof and a simple interior, represents the third step in Musk’s strategy to help bring in the era of sustainable electric mobility. Tesla, which hopes to reach production levels of 500,000 cars per year by 2020, entered the market in 2008 with the Tesla Roadster. The £86,950 sports car’s purpose was to prove that electric cars can be fast and cool. It was followed by the now flagship £55,000 Model S demonstrating the practicality of electric vehicles. With Model 3, Tesla finally hopes to hit the mass market and address the not so incredibly well-off drivers.
Tesla says its current manufacturing facility in Fremont, Califorina (previously owned by GM and Toyota), can support the envisioned production levels. The major drawback will be the amount of lithium-ion batteries required. The firm is already working on solving this challenge with its Gigafactory currently under construction in Nevada. The facility, Musk foresees, will produce more lithium-ion batteries than all the other world’s lithium-ion battery factories combined. This massive scale of production will enable Tesla to cut the cost of its battery packs by 30 per cent.
Tesla and other manufacturers of affordable electric cars may, however, face further hindrances as lower petrol prices affect interest in electric vehicles. According to data from the Electric Drive Transportation Association, sales of all-electric and hybrid vehicles went down by nearly 9 per cent in the first two months of 2016. That's fewer hybrid and battery electric vehicles sold in two months than Ford sold of its F-series large pickup trucks in February alone.
This is bad news for Tesla, which has been losing money ever since its conception. Tesla said in February it expected to start making profits this month.
Ahead of the unveiling, the firm’s shares jumped up to $230 per share, recovering from a major drop to as low as $141.05 in February.
"It [Model 3] is important to the industry because it will signal whether or not Tesla Motors is a major threat to the status quo or just another wannabe car company with a fleeting chance for long-term success," said Jack Nerad, analyst from Kelley Blue Book.
Tesla, however, already has a solid fan base. Ahead of the Thursday launch, fans could be seen camping in front of Tesla stores in California to put deposits on the anticipated vehicle.
GM is on track to beat Tesla to the market with its Chevrolet Bolt electric car, which GM says will launch later this year, offering about 320 km/h of electric driving range and a starting price of around £24,000.
A new generation of Nissan Motor’s Leaf electric car is also expected to offer more driving range at a similar price.