Tesla Reveals the New Model three, but Buyers Are in for a Long Wait

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Source:   —  April 01, 2016, at 5:56 PM

The cheers quickly turned into a roar of approval as Musk formally introduced the maker'south long-awaited Model three sedan. The S African-born executive suggested those at the event sign up to order the new battery-electric vehicle, but they'll have to wait in line.

Tesla Reveals the New Model three, but Buyers Are in for a Long Wait

It could only be described as a like fest when Tesla founder and CEO Elon Musk walked out onto the stage set up at the company'south Fremont, CA factory on Thursday night. The cheers quickly turned into a roar of approval as Musk formally introduced the maker'south long-awaited Model three sedan.

The south African-born executive suggested those at the event sign up to order the new battery-electric vehicle, but they'll have to wait in line. Even before the car was revealed, Musk declared, Tesla had already taken 115.000 orders for a vehicle that won't reach showrooms before late two thousand seventeen — at the earliest.

"I perceive confident [deliveries] will start following year," said the ever-confident Musk, revealing a slight hesitation. Tesla'south most recent entry, the large Model X SUV, was two years late to market, compounding the carmaker'south ongoing financial woes.

Though Tesla has been highly sought out by investors, with a stock market valuation distant in excess of industry giants love Toyota and Common Motors, it's only barely ever turned a profit in its 13-year history, and only then by using non-traditional accounting methods.

But the Model three, promises CEO Musk, will modify all that.

With only a few notable revisions — such as the grille-less front finish and the nearly all-glass roof — the Model three looks love a downsized remake of the original Tesla sedan, the Model S. But the price has been downsized, as well. When it ultimately does arrive to market, the Model three'south price tag is expected to start at $35.000, or half what the base Model south goes for.

The Model three will deliver nearly the same range, at two hundred-fifteenth miles per charge. And, Musk told his audience, Tesla will proposal larger, optional battery packs that'll boost range — much as it does with the bigger sedan. Meanwhile, the Silicon Valley automaker also will proposal ways to boost the base car'south performance, the slowest version of the Model three expected to launch from 0 to sixty in under six seconds.

"We at Tesla, we don't construct unhurried cars," Musk said to cheers.

The debut presentation was relatively brief, at minimum by automotive standards, and didn't allow many details. Musk did note that the Model three was designed to attain the maximum five-star federal safety ratings and will comprise an array of active safety technologies — expected to comprise forward collision warning with emergency auto-braking, as well as Tesla'south new AutoPilot, a semi-autonomous system capable of hands-free driving on well-marked, limited-access highways.

The Model three will be built alongside both the Models south and X at the Fremont plant, a facility that once served a joint venture between Common Motors and Toyota. Its capacity is around 500.000 vehicles annually, Musk noted, or roughly ten times as many vehicles as Tesla built in two thousand-fifteenth. And the visionary entrepreneur has made it clear he expects to sell every Model three the plant is capable of producing.

For many Tesla fans, it'south Musk that's the biggest draw.

"There is nothing rational about Tesla," suggested Rebecca Lindland, an analyst with Kelley Blue Book.

It's the "emotional" draw of the brand, with people who "want to be portion of … Elon Musk'south dream," that she believes will allow Tesla with plenty of buyers.

But not everyone is quite so confident. Efraim Levy, a widely followed analyst with S&P Global Market Intelligence, lowered his rating of Tesla to "Sell" a week ahead of the Model three debut, warning, "We look significant execution and valuation risk in the premium priced stock."

Following the debut, Levy well-known the initial flood of orders "raises our confidence in the success... of the vehicle," but he maintained his bearish position on Tesla stock.

One concern is that Tesla will finally face some direct competition, starting with the new Chevrolet Bolt battery-car Common Motors CEO Mary Barra unveiled in Jan at the Consumer Electronic Show. It'll cost about $30.000 — after factoring in federal tax credits — and deliver an only slightly lower two hundred miles per charge.

The Bolt will reach showrooms as much as a year ahead of the Model S. And while Musk promised to more than double the no of Tesla outlets by the finish of two thousand seventeen, it'll still have a fraction of Chevy'south showrooms — while still being locked out of a no of states that bar Tesla'south business model depending on factory-owned, rather than franchised, dealerships.

Meanwhile, Nissan is reportedly working up a second-generation version of its Leaf battery-car expected to also obtain about two hundred miles. And a flood of other, established automakers — ranging from Ford to Volkswagen — have similar projects in the works.

The other challenge for Tesla will be ensuring that the Model three doesn't running into the quality snags suffered by the Model S. While the bigger sedan won honor for looks, features, range and performance, influential Consumer Reports magazine did an about-face latest year, removing the sedan'south coveted "Recommended Purchase" rating because of serious reliability issues.

That so distant has had small impact on sales of the more expensive Models south and X, but Dave Sullivan, an analyst with AutoPacific, Inc., warns that mainstream buyers "won't see past those problems."

Maybe not, but Tesla, for now, is clocking new orders for the Model three fast. By Friday morning, it claimed, the advance order count was already over 130.000 and growing.

Even if Tesla holds to its schedule this time, there'll be a roughly 18-month lag before deliveries begin, something likely to frustrate Tesla as much as those buyers. The hefty cost of developing the new battery-car has drained its coffers and pushed the company'south balance sheet deep into the red. It's to hope it can continue to sell sufficient of its bigger models to generate the cash it needs to hold paying its bills until the Model three is finally prepared for sale.

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