Despite widespread concerns that falling gas prices would strike a significant blow to the electric vehicle market, Tesla Motors announced last week that it had received over the course of three days nearly 300,000 preorders for the new Model 3. It is the fourth electric vehicle designed by Tesla and the one it wants to invade the mass market.
On the morning before the prototype was revealed at the company’s design headquarters in Hawthorne, Calif., Tesla tweeted photographs showing hundreds of customers waiting outside dealerships to reserve the new model. Several videos shared by the company showed lines snaking through city streets, and even lone customers waiting outside dealerships days in advance.
The Model 3 will have a driving range of at least 215 miles on a single charge, with support for the same autonomous features found in the company’s earlier cars. It starts at $35,000 before federal tax credits. That is half the price of Tesla’s initial Model S, which can travel up to 270 miles on a single charge, and significantly lower than the $132,000 Model X sports utility vehicle.
The Model 3 is “the final step in the master plan, which is a mass market, affordable car,” Elon Musk, Tesla’s chief executive, said at last week's reveal. “It was only possible to do that after going through the prior steps.”
Musk recently said that the company received 115,000 preorders within the first 24 hours since its website opened for the Model 3, which is not expected to enter production until 2017. Many of these orders were placed before Musk unveiled the prototype last week. Three days after preorders started, Musk tweeted that the number of preorders (with a $1,000 down payment) had reached 276,000. For comparison, the company produced 50,580 vehicles in 2015.
In recent years, auto companies have been building more electric and hybrid cars in part to meet higher fuel efficiency regulations, rather than widespread consumer demand. But advances in fuel efficiency and the falling gas prices have threatened to delay the widespread growth of electric vehicles. Musk, however, has dismissed the idea that lower gas prices will undermine Tesla’s latest vehicle.
“Even if the economics of oil favor gasoline, I think the Model 3 still does well,” he said in an interview with CNN earlier this year. “It’s more cases where there is little to no differentiation between the gasoline version of something and the electric version. If they’re about the same, and the electric version doesn't have a compelling economic proposition, then you’ve got a real issue in the market.”
Tesla also faces competition from Nissan and General Motors, which recently unveiled a new model capable of driving 200 miles on a single charge. To help compete, Tesla plans to build out its charging infrastructure, adding another 3,600 supercharger stations and quadrupling the number of wall connectors operated by hotels, restaurants, and stores by the end of next year.
Tesla’s plans to outpace competition are closely tied to the Gigafactory, an enormous lithium-ion battery plant being constructed in the deserts of northern Nevada. Musk said that when the Gigafactory reaches full capacity in 2020, it will produce more lithium-ion batteries annually than were produced worldwide in 2013.
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