FREMONT — The Tesla Model 3 — fast, electric and available in the dreams and budgets of more common car owners — left the Fremont factory lot for the California streets Friday evening.
CEO Elon Musk drove on stage in a red Model 3 and handed over 30 new electric vehicles to employees at a factory gala, while offering new details about the lower-cost sedan and rallying his troops for challenges ahead.
“We’re building the cars as fast as we can,” Musk told an audience of several hundred workers. But, he cautioned, it’s a complicated process. “We care about every part of it.”
The release expands Tesla into the broader market of entry-level luxury cars, bringing it into direct competition with imported sport sedans. The expanding but unprofitable manufacturer carries a stock market valuation of $55 billion, bigger than GM and Ford, but is pinning its near-term success on a Model 3 breakout.
The first owners included early investors and Tesla employees. Each deposited $1,000 last spring for the opportunity to own an electric sedan, sight unseen. Sales ignited in March 2016 after three prototypes rolled across a stage in Southern California with Musk.
“The final step in the master plan,” Musk said as he stood on stage then, before an image of a curtain-draped Model 3. “A mass-market, affordable car.”
Reservations opened and swelled quickly to almost 400,000 customers.
On Friday, the automaker colored in some features and options for the Model 3:
- A single charge range increased from 215 to 220 miles
- A top speed of 130 mph, or 140 mph for premium editions
- A supercharging range of 130 miles after 30 minutes of charging
- A larger battery pack, for $9,000, extending range to 310 miles
- An autopilot driver-assist package for $5,000, with a full self-driving option for an additional $3,000
- A $5,000 premium package with high-end audio, heated seats and tinted glass roof.
The fast four-door has a sweeping glass roof, room for five adults, 220 miles of range and is equipped for semi-autonomous driving. Its magic number is $35,000, the base price, about half the cost of a stripped-down Model S.
Musk targeted production to hit about 5,000 Model 3s per week by the end of the year, and jump to 500,000 total vehicles next year. The company will also let owners start to choose options for their Model 3 online after the first batch is delivered. Choices will be limited.
“We have kept the initial configurations for Model 3 very simple. This is critical to achieving a rapid production ramp,” Musk said last month. “It’s kind of going to be like what color do you want and what size of wheels do you want.”
Demand remains strong and the company is focused on ramping up production, Musk said.
“The line isn’t getting shorter. We are doing our best to do this ramp. We got to do the ramp right,” he said. “We got to make sure that the quality is good, the safety is good, and it’s crazy hard to make cars.”
Analysts surveyed by Bloomberg estimate the automaker will continue to lose about $2 per share for the next three quarters. Some see a brighter upside. Baird Equity Research analysts believe the company will turn a profit next year and produce about 310,000 vehicles, including 190,000 Model 3s.
Akshay Anand, executive analyst at Kelley Blue Book, said Tesla remains a “lifestyle brand” to many customers. The Model 3 brings that lifestyle into reach, he said.
“Will the Model 3 meet lofty expectations? Can production continue without hiccups, unlike with the Model X?” Anand asked. “There are even implications beyond Tesla. If the Model 3, along with the Chevy Bolt, meets or exceeds expectations, it could be the early steps toward an electric future in automotive.”
Model 3 prototypes have been glimpsed around Los Angeles, near the headquarters of Musk’s other company, SpaceX, and in Silicon Valley, around Tesla’s Palo Alto headquarters and Fremont factory. Fans posted hundreds of spy photos and endlessly speculated on minute details online.
On Friday night, the wait ended for some. Dozens of new Model 3s waited on the side of the stage for their new owners.
The new Tesla may need a little extra to thwart its growing competition. The comparably priced Chevy Bolt went on sale late last year. The pure electric hatchback has a range of 235 miles and a sticker price of about $37,000. GM has sold 7,600 this year, according to reports from InsideEVs.com.
Every major manufacturer plans to roll out new or updated electric vehicles in the coming years.
Rebecca Lindland, executive analyst at Kelley Blue Book, said Tesla is in a strong position with eager customers lined up to buy.
“Will current owners evangelize the brand to the masses, spreading Model 3 love down the golden path of profitability?” she said. “It will be fascinating to see if Tesla has the delivery, ownership and service infrastructure to satisfy an adoring but increasingly demanding public.”
Musk acknowledged the challenges ahead. “How do build a huge number of cars? Frankly, we’re going to be in production hell,” he told Tesla employees. Many laughed and cheered.
“Welcome,” Musk said. “Welcome to production hell.”
Model 3 at a glance
Price and range: The $35,000 base model has a range of 220 miles on a single charge.
Materials: built of aluminum and steel, with optional glass roof
Speed: 0 to 60 mph in 5.6 seconds
Safety: designed to receive 5-star crash rating from federal regulators
Comparisons: smaller than the Model S sedan with fewer luxury appointments and less technology; about the same size as a BMW Model 4 series
Owners pay for Supercharging
Display: one 15-inch touchscreen
