Saturday, 19 August, 2017

Mainstream Model 3 Could Make or Break

Screengrab via The SpaceX Fan Club  YouTube Screengrab via The SpaceX Fan Club YouTube
Juana Turner | 02 August, 2017, 00:38

The first 30 production ready versions of the auto were delivered at the event to Musk himself and 29 other Tesla employees.

The Model 3 will be priced at around U.S. $35,000, making it the most affordable offering from Tesla yet.

Tesla CEO Elon Musk acknowledged issues with the Model X at the company's shareholder meeting in June.

Musk confirmed that production for the Model 3 is already ramping up at Tesla's Gigafactory in Nevada, US.

Musk aims to make 500,000 vehicles next year, a number that could help Tesla finally make money.

But the handover event came as nearly an anticlimax for Wall Street, and TSLA shares started tumbling after Musk told journalists ahead of the ceremony, "We're going to go through at least six months of manufacturing hell".

One month ago, Tesla announced that its second-quarter deliveries climbed 53% but were at the low end of expectations.

The 3 is the weakest in the looks department, as the high roofline and slab-sided design is a big departure from the Model S' taut, handsome lines. An analyst warned that a wave of optimism toward Tesla could wane once investors begin to judge the company on product demand, growth and profit.

Tesla faces major hurdles living up to the Model 3 hype.

Tesla has said the Model 3 is not meant to be a replacement for the Model S, nor an improvement over it.

Electric cars are seen by many as the cars of the future and Tesla agrees.

"Cannibalization by the Model 3 is clearly a risk - the fact that almost a third of current owners hold reservations raises concerns that the Model 3 may cannibalize sales of higher-end Tesla models upon launch", said Sacconaghi in his note.

The Model 3 has always been part of Palo Alto, California-based Tesla's plans.

Tesla's fans are confident.

Tesla will also be using the Model 3 as an opportunity to scale up its manufacturing.

The company's desire to move beyond its current position as a niche maker of luxury cars largely rests on the Model 3.

Tesla said it is preparing its factory in Fremont, California, to produce 5,000 Model 3 sedans per week sometime before the end of 2017 and 10,000 per week at some point in 2018.

Potential customers also could lose faith if Tesla doesn't meet its aggressive production schedule, or if the cars have quality problems that strain Tesla's small service network.

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