Tesla is looking to bring its new, more affordable luxury electric car to the mass market with a new Model 3, and it’s getting quite a response from consumers.
Although the Model 3 won’t be out until late next year or maybe even later, hundreds of people in Toronto waited in line early Thursday morning, putting up $1,000 for a reservation to buy the small four-door sedan.
Tesla plans to unveil its Model 3 electric car Thursday night at its Los Angeles design studio.
At a starting price of US$35,000, before any government incentives, the Model 3 is less than half the cost of Tesla’s previous models. The car is expected to have a range of at least 321 kilometres when fully charged, about double what drivers get from competitors in its price range, like the Nissan Leaf and BMW i3.
In Toronto, people lined up early outside Tesla dealership on Lawrence Avenue East and at the company’s showroom at Yorkdale Mall.
Tesla is seen as a luxury brand and many consumers are looking at this vehicle as a bargain version of the Model S, which costs $100,000.
“It’s the people’s car, it’s something that most people can afford,” prospective buyer Chris Trim told CityNews.
“It’s a really good deal. You have to weigh the costs and the benefits, but at the end of the day it’s a great car, it’s helping the environment, sustainable […] and it’s really cool device,” Jayson Antao said.
The Model 3 is the most serious test yet of 13-year-old Tesla’s ability to go from a niche player to a full-fledged automaker. It could be the car that finally makes electrics mainstream, or customers could be scared off by Tesla’s limited number of stores and service centres. Either way, the Model 3 is already changing the industry, spurring competitors to speed development of electric cars and improve their battery range.
“The Model 3 is going to be a pivotal model for Tesla,” said Patrick Min, a senior analyst with the car buying site TrueCar.com.
Right now, Tesla sells two vehicles: The Model S sedan, which starts at $71,000, and the Model X SUV, which starts around $80,000. The Model 3 is a critical part of the money-losing automaker’s plan to increase sales from around 85,000 this year to 500,000 by 2020.
Tesla not the only luxury car company trying to grab a larger part of the market. Porsche is offering a more affordable vehicle with the Macan Crossover. Around 2,000 were sold in Canada last year, costing around $53,000.
What we know about the Model 3
When will it go on sale?
Tesla has said it expects to start Model 3 production at its Fremont, California, factory at the end of 2017. But the company has a history of delays. The Model X, which went on sale last fall, was initially due to go on sale in early 2014. Musk said last month that the Model 3, unlike the Model X, is designed for “ease of manufacturing.” Still, some analysts are doubtful. Morgan Stanley auto analyst Adam Jonas thinks Tesla won’t start building the Model 3 until the end of 2018.
Who are its competitors?
General Motors is set to start selling the Chevrolet Bolt electric car at the end of this year, a full year before the Model 3. The Bolt will have a similar price tag and a 321-kilometre range. Hyundai’s Ioniq, which has a 177-kilometre electric range and could match Tesla on price, goes on sale this fall. Audi will follow with an electric SUV in 2018. Musk said last month he’s not worried. He thinks the Model 3 will compete most directly with small luxury cars like the Audi A4 and the BMW 3 Series.
How did tesla make the model 3 less expensive?
Cheaper batteries. Tesla previously assembled its battery packs with battery cells made in Japan by Panasonic Corp. But Tesla and Panasonic are building a massive, $5-billion factory in Nevada which will supply batteries for the Model 3. Tesla says the scale of the factory will lower the cost of its battery packs by 30 per cent.