Musk Unveils Tesla's $35,000 Model 3 in Push for Mass Market

Meet Tesla's Stunning New Model 3
  • Battery-powered Model 3 will be rated about 215 miles range
  • Tesla collects more than 115,000 orders within 24 hours

Elon Musk revealed Tesla Motors Inc.’s Model 3, the sedan the electric-car maker is counting on to expand its customer base and reach sustainable profitability, late Thursday, capping a day in which fans lined up to reserve vehicles sight unseen at stores around the world. The shares jumped on Friday.

The $35,000 Model 3 will have a minimum 215 miles (346 kilometers) range, and Musk said he’s “fairly confident” deliveries will begin in 2017. Tesla received more than 115,000 reservations in 24 hours, Musk said on stage at the company’s Hawthorne, California, design studio. On Friday, Musk said in a tweet that orders had reached 180,000 after 24 hours, with an estimated value of about $7.5 billion.

Watch as Elon Musk Unveils the New Model 3

“We have an amazing product. I think you’ll be blown away,” Musk, 44, said Thursday. “You will not be able to buy a better car for $35,000, or even close. It’s a really good car, even with no options.”

The Model 3 is the linchpin of Tesla’s plan to reach beyond affluent buyers and make electric vehicles a significant part of the auto market. Much of the car’s platform is new, including the battery architecture and motor technology. Many of the executives who worked on the Model 3, including Chief Technology Officer JB Straubel and chief designer Franz von Holzhausen, have been part of the company’s leadership team for years.

Shares in the company rose 2.4 percent to $235.33 at 12:40 p.m. New York time after jumping as high as $247.90, the highest intraday price in almost half a year.

“Tesla has changed the game again,” Andrea James, an analyst with Dougherty & Co., said in a note Friday in which she raised her price target to $500. “In one day, Tesla generated at least 150,000+ reservations, representing an order book of $6 billion in revenue, and generating $150 million in zero-cost capital from the $1,000 customer deposits.”

‘Righteous’ Reaction

The number of reservations exceeded some analysts’ estimates and is more than the roughly 107,000 vehicles Tesla has sold to date. At $1,000 each, the deposits would infuse the company’s coffers with at least $180 million. While the reservations are refundable, the outpouring suggests there will be plenty of demand for the company to work through once production gets under way.

“Model 3 orders at 180,000 in 24 hours,” said Musk in a tweet Friday. “Selling price with avg option mix prob $42K, so ~7.5B in a day. Future of electric cars looking bright!”

Hardware for Tesla’s Autopilot features will be standard and the four-door sedan will seat five adults. Design features include one large, continuous piece of glass for the rear roof area to enhance visibility.

“I thought the car was hot, especially with the matte finish,” Adam Browning, 45, the executive director of Vote Solar in Oakland, California, said at the Thursday night event. “The righteous future isn’t just good, it’s better. It’s faster, cooler and sexier.”

Superchargers, Stores

Tesla plans to double the number of its Supercharger stations and its store count by the end of 2017. Customers in new markets including Brazil, India and Musk’s native South Africa were among consumers able to place orders online Thursday.

By the time Tesla’s Short Hills, New Jersey, store opened to take reservations at 10 a.m., more than 200 people had queued up. Soji Ojugbele, 29, a software quality tester from Plainfield, New Jersey, had been in line since 4 a.m.

“I test drove the Model S and just fell in love,” he said Thursday in an interview. “If you’re as passionate about something as people are about the Tesla, it’s not a surprise.”

U.S. Tesla customers are eager to get their cars before the $7,500 federal tax credit for electric vehicles is phased out. While the Model 3’s base price still makes it a luxury model, it is not nearly the financial stretch for consumers as the $75,000 Model S.

10-Year Wait

“I’ve been waiting to buy an electric car for 10 years,” Mark Dilsizian, a doctoral student at New Jersey’s Rutgers University who also runs a software startup, said on Thursday. “It’s safer, it’s greener, it’s better performing, it’s better designed.”

Tesla’s “master plan,” laid out by Musk in August 2006, was to enter the auto industry at higher-end prices, then drive down market as fast as possible with increasingly higher volumes. The Model 3 is the Palo Alto, California-based company’s fourth car, after the Roadster, the Model S sedan and the Model X sport utility vehicle. The Model X was unveiled in February 2012, with delays pushing back the initial deliveries to customers until September 2015.

Model 3 faces an increasingly competitive landscape. General Motors Co. plans to release its all-electric Chevrolet Bolt at a similar price point later this year. The Model 3 likely will target buyers who also would consider small luxury sedans such as the Audi A4 and BMW’s 3 series.

“Thank you everyone who ordered the car,” Musk said late Thursday. “We love you!”

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