Tesla fans around the world
queued up to add their names to a reservation list in anticipation of
Tesla Motors' planned Thursday night unveiling of its Model 3. The
long-awaited new addition to the Tesla line is a more affordable sedan
that targets not just early adopters, but a larger audience of luxury
car owners.
Company founder Elon Musk has shared key details in advance of the
reveal. The Model 3 will offer a 200-mile range and will come with a
US$35,000 sticker price -- which could drop to around $27,500 after tax
credits.
The Model 3 is expected to arrive by late 2017.
Electrifying the Masses
The Model 3 is poised to be a game changer for the company, which has
developed a cult following but so far has failed to break out to the
masses. Tesla reportedly sold just 42,000 vehicles in the United States
in 2014 and 2015, and while it has announced plans to sell some 90,000
Model S and Model X cars this year, it is still far from going
mainstream.
The Model 3 could change that, according to Rob Enderle, principal analyst at the
Enderle Group.
"This is Tesla's first affordable car falling into a segment and size
far more attractive to a far wider range of buyers," he told
TechNewsWorld.
"This takes them far closer to a mainstream auto company," Enderle said.
"So the hope is this breaks them out," he added. "The risk is that
this far higher volume will overwhelm the existing stressed charging
ecosystem, particularly the critical -- for Tesla drivers --
superchargers."
Taxing Issues
Tax credits are meant to entice early adopters, but they aren't open
ended. Nor is Tesla alone in utilizing the federal tax credits to help
attract buyers to electric vehicles. Moreover, the tax credits are
available only for the first 200,000 vehicles from a manufacturer and
are phased out as sales increase. Thus, Tesla's potential success could
impact those credits and the savings for its buyers.
"There is still space in the market, but this vehicle has the
potential to be higher volume in sales," said Stephanie Brinley, senior
analyst at IHS Automotive.
"It is an important point but could be a ways before we see the credits go away," she told TechNewsWorld.
More importantly, the $30,000 price point would apply only to the
most basic models, so many would-be buyers should expect to pay more for
added features.
"As with any luxury automobile, there can be a price ladder that
means a $15,000 to $18,000 increase from base to top," Brinley added.
"As a result, the entry level may not be the largest-selling vehicle
anyway."
High Expectations
Despite the fact that the costs for the Tesla Model 3 could exceed the
budgets of many consumers, there is still the potential for considerable
interest.
"Tesla has become the Apple of the motorcar industry; just as people
trust Apple with the latest thing, Tesla is filling that space when it
comes to cars," said Peter Harrop, chairman of
IDTechEx.
"For the masses, it has been that only rich people could buy one, but
now the Tesla is becoming something closer to what they can afford," he
told TechNewsWorld.
"There is still excitement because this is about a Tesla that is more
affordable than the other models," noted IHS Automotive's Brinley.
"However, it may be difficult to maintain the hype after the initial
orders have been placed, and that pace may be hard to maintain."
Beyond the Luxury
For Tesla to succeed, it has to widen its potential audience, especially
as it seeks to reach profitability, she added. The Model 3 could set
the automaker on the right path, but it could still be a long road
ahead.
"It would be less critical if it wasn't aimed at the mainstream, but
right now Tesla is at a point where it has to reach profitability sooner
than later," Brinley said.
"One of the important things is for Tesla to generate buzz and cash
flow, but to succeed they have to bring in non-luxury buyers --
especially in 2019 and 2020 when the hype from the Model 3 dies down,"
she noted.
That presents another challenge for the automaker.
"This means coming from upmarket to downmarket, and that doesn't
immediately work because they don't have the economy of scale to do
something for the everyman," said Harrop.
"It will be interesting to see if Elon Musk can manage to do this,
which is a major leap for any luxury brand," he added. "In industrial
terms, companies normally upmarket from a downmarket, and for Tesla it
means going from luxury to masses -- and that will be tricky to pull
off."
Source:
www.technewsworld.com