Tesla Inc chief executive officer Elon Musk on Friday said that the firm’s Model 3 car had over half a million advance reservations as he handed over the first 30 to employee buyers, setting the stage for the biggest test yet of the company’s strategy to become a profitable, mass market electric car maker.
Outside Tesla’s Fremont, California, factory, Musk showed off the US$35,000 base vehicle with a range of 350km on a charge that marks a departure from the company’s earlier luxury electric cars.
Musk took to the stage driving a red Model 3, and said Tesla has produced 50 of the vehicles so far, including 20 for testing purposes.
Photo: Reuters
Hours before the event, Musk acknowledged it would be “quite a challenge” to build the car during the early days of production.
“We’re going to go through at least six months of manufacturing hell,” Musk told journalists.
The over half a million reservations are up from about 373,000 disclosed in April last year. Customers pay US$1,000 refundable deposits for the car, which is eligible for tax credits.
Any new buyers would likely not receive their car until the end of next year, Musk said.
A longer-range version of the car is priced at US$44,000 and will drive 500km on a single charge. The cars feature a streamlined dashboard devoid of buttons or knobs, with a 38cm touchstream display to the right of the driver.
Tesla faces major hurdles living up to the Model 3 hype. The 500,000 vehicles Tesla vows to produce next year are nearly six times its production last year.
Were Tesla to produce and sell 500,000 cars per year, the company would likely outsell the BMW, Mercedes or Lexus brands in the US.
Production delays and quality issues marred the launches of Tesla’s Model S and Model X vehicles, and the company blamed production problems for a shortfall during the second quarter of this year.
Musk has said a simpler Model 3 design will greatly reduce potential assembly-line problems.
Tesla has burned through over US$2 billion in cash so far this year ahead of the launch. A troubled Model 3 launch could heighten the risks for the company, while a steady delivery of Model 3s could generate a stream of cash that would allow Tesla to avoid going again to the capital markets to fund its operations.
The company’s share price has surged 54 percent since January in anticipation of the Model 3 launch, and Tesla’s pricey valuation now exceeds that of traditional rivals like General Motors Co and Ford Motor Co.
The Model 3 is part of Musk’s broader plan to build a clean energy and transportation company that offers electric semi-trailer trucks, rooftop solar energy systems and large-scale battery storage systems.
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