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Tesla unveils $35,000-Model 3 with range of 215 miles

Reuters HAWTHORNE | Updated on January 20, 2018

A handout photo provided on April 1, 2016 by Tesla Motors shows the car manufacturer's new Model 3 which was unveiled on March 31, and is scheduled to hit the market late next year.

More than 130,000 pre-orders taken; Tesla adds India, Brazil, South Africa, South Korea, New Zealand, Singapore, Ireland to order page

Tesla Motors gave a sneak preview Thursday of its Model 3 sedan, saying more than 130,000 people had ordered the car, even though it is more than a year away from production.

Tesla Chief Executive Elon Musk unveiled a prototype of the Model 3 in Hawthorne, California outside Los Angeles to hundreds of Tesla owners and the media, saying the vehicle will go into production in 2017 at a starting price of $35,000.

The vehicle will have range of 215 miles (346 km) per charge.

The Model 3 is critical to the Silicon Valley automaker's growth plans and to sustaining its lofty stock price. Tesla shares have jumped in recent days in anticipation of the Model 3 launch.

The Model 3 will enter a crowded field of luxury and electric cars that includes gasoline-fueled models such as the Audi A4 and BMW 3-Series, and electric models such as the forthcoming Chevrolet Bolt EV from General Motors Co.

“Do you want to see the car?” teased Musk, to screams from the audience in the hangar-sized facility inside a Tesla design center. “We don't have it for you tonight -- just kidding!"

Three Model 3s were driven onstage. The compact sleek four-door car with no grille features a roof that is a panoramic pane of glass from front to back.

Musk said that 115,000 pre-orders had already been taken on Thursday alone for the car. Within a half hour, that number reached 137,600 in a rolling scroll projected onto a screen.

Fans queue up

Fans of luxury electric car maker Tesla Motors Inc camped out overnight and stood in long lines to put down deposits on its new more affordable model.

In scenes reminiscent of the launch of Apple Inc products, would-be buyers of the Silicon Valley car maker's Model 3 pitched tents and set up camping chairs on the sidewalk outside Tesla stores, which began taking pre-orders for the vehicle.

Musk said in a tweet that Tesla has added more countries including India, Brazil, South Africa, South Korea, New Zealand, Singapore and Ireland to the Model 3 order page.

The line at a Pasadena Tesla store near Los Angeles stretched around the block, and the San Francisco-area ABC TV affiliate showed a long line filled with camping chairs and tents at the Tesla store in Walnut Creek. In Burbank around 500 people waited at midday.

In La Jolla, California, 25-year-old biomaterials engineer Ali Athar waited for about five hours before signing up for two cars, one for him and one for his sister.

The line at the La Jolla mall stretched past a soon-to-open Amazon.com book store and an Apple store. Tesla's designs, energy efficiency, and the chance to meet like-minded people, spurred him to join the line, Athar said. Refundable deposits are $1,000 each.

“It's the beginning of a new era. I want to support that revolution,” he said.

The price tag of the Model 3 is about half the starting price of the Model S luxury sedan, which is faster than most of the priciest supercars around the globe. The more affordable model is critical to Tesla's growth plans as it moves into a broader consumer segment.

US consumers can lower the cost of electric vehicles with a $7,500 federal tax credit and some states including California offer state tax credits as well.

Model 3 crucial to Tesla

The Model 3 is crucial for Tesla to reach its goal of selling 500,000 cars per year by 2020. The success of Tesla's Gigafactory, its battery factory near completion in Nevada, is also contingent on the Model 3.

Tesla says scale from the massive facility will cut the cost of its battery pack by 30 per cent to enable the lower-priced vehicle.

High expectations ahead of the unveiling have restored Tesla's shares to around the $230-mark, recovering from a year low of $141.05 in February after analysts cut price targets and revenue expectations.

“It is important to the industry because it will signal whether or not Tesla Motors is a major threat to the status quo or just another wannabe car company with a fleeting chance for long-term success,” said Kelley Blue Book's Jack Nerad.

GM is on track to beat Tesla

GM is on track to beat Tesla to the market with its Chevrolet Bolt electric car, which GM says will launch late this year, offering about 200 miles of electric driving range and a starting price of around $35,000.

A new generation of Nissan Motor Co's Leaf electric car is also expected to offer more driving range at a similar price.

The Model 3 and others in the new generation of electric vehicles face challenges from low gasoline prices, high battery costs and uncertain investment in recharging infrastructure.

Through the first two months of this year, sales of all-electric and hybrid vehicles are down nearly 9 per cent to 60,384 vehicles, data from trade group the Electric Drive Transportation Association shows.

That's fewer hybrid and battery electric vehicles sold in two months than Ford sold of its F-series large pickup trucks in February alone.

Several short-term concerns, such as that Model 3 production will be delayed, and the slow ramp of the Model X will continue, go hand-in-hand with sceptics' longer-term worries that the unprofitable company will continue to bleed cash.

In February, Tesla said it would start generating positive cash flow this month.

Published on April 01, 2016

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