Tesla goes mainstream with its Model 3 | Business| Economy and finance news from a German perspective | DW | 01.04.2016
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Tesla goes mainstream with its Model 3

The carmaker, as well as the electric cars that it exclusively produces, have long occupied only a niche in the automotive market. But the carmaker aims to change this with the Model 3, its first mid-price offering.

Tesla announced the basic version could go 345 kilometers (214 miles) between charges and accelerate from 0-60 miles in six seconds. The Model 3 would start shipping by late 2017, the company confirmed in earlier media reports.

Around 115,000 preorders, along with downpayments of $1000 (880 euros) each, were made in the first 24 hours of availability.

Among Tesla CEO Elon Musk's many missions is making human life possible on another planet. But on Thursday night, Musk took a big step in another plan nearly as ambitious - making electric cars popular here on earth.

The brand's electric cars have until now been as well known for their high price tags as they are for their environmental upside.

The Model 3 will have a price tag of $35,000 - half the price of its flagship Model S.

Great expectations

With the Model 3 in its line-up, the carmaker is expected to sell 500,000 electric cars annually by 2020. A successful launch would therefore help push along both the popularization of electric vehicles and the establishment of Tesla as a force to be reckoned with.

The company has yet to turn an annual profit since its founding in 2003.

"The Model 3 is really the measure if Tesla is going to make it long-term as a car company," said Jessica Caldwell, an analyst at the auto industry website Edmunds.com.

Karl Brauer, an analyst at Kelley Blue Book, agrees. "This is their chance to prove that they are not just a specialized niche automaker, but actually a long-term volume automaker."

Tough competition

But success is far from guaranteed for the Model 3, which will be competing with the lures of cheap gasoline and Chevrolet.

The drop in oil prices has reduced the demand for electric-powered vehicles in the US. SUV sales have jumped back up, while green vehicles continue to make up only a sliver of US car sales.

In addition, American carmaker Chevrolet will be bringing to market its own moderately-priced electric model - the Bolt - a year before the Model 3's entrance.

The Model 3 would have been a "game-changer" if it came first, analyst Brauer remarked.

Both vehicles will get a push from the US government, which offers rebates - usually worth around $7,500 - to make the purchase of electric cars more attractive.

And Telsa's Model 3 at least beats the Bolt in price. Chevrolet's car is expected to cost about $37,000.

Tesla's luxurious roots could also work in its favor. It has a certain "cachet and a brand image," a project marketing manager for Chevrolet's electrification division admitted.

jtm/hg (AFP, dpa)

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