Model 3 holds prom­ise and peril for Tesla

The Guardian (Charlottetown) - - BUSINESS - BY DEE-ANN DURBIN

For Tesla, ev­ery­thing is rid­ing on the Model 3.

The elec­tric car com­pany’s new­est ve­hi­cle is set to go to its first 30 cus­tomers Fri­day evening. Its $35,000 start­ing price — half the cost of Tesla’s pre­vi­ous mod­els — and 215-mile range could bring hun­dreds of thou­sands of cus­tomers into the au­tomaker’s fold, tak­ing it from a niche lux­ury brand to the main­stream.

Those higher sales could fi­nally make Tesla prof­itable and ac­cel­er­ate its plans for fu­ture prod­ucts like SUVs and pickup trucks.

Or the Model 3 could dash Tesla’s dreams.

Po­ten­tial cus­tomers 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. The com­pact Model 3 may not en­tice a global mar­ket that’s in­creas­ingly shift­ing to SUVs, in­clud­ing all-elec­tric SUVs from Audi and oth­ers that are go­ing on sale soon.

Lim­its on the $7,500 U.S. tax credit for elec­tric cars could also hurt de­mand.

Once an au­tomaker sells 200,000 elec­tric cars in the U.S., the credit phases out.

Tesla has al­ready sold more than 126,000 ve­hi­cles since 2008, ac­cord­ing to es­ti­mates by Ward­sAuto, so not ev­ery­one who buys a Model 3 will be el­i­gi­ble.

“There are more rea­sons to think that it won’t be suc­cess­ful than it will,” says Karl Brauer, the ex­ec­u­tive pub­lisher for Cox Au­to­mo­tive, which owns Au­to­trader and other car buy­ing sites.

The Model 3 has long been part of Palo Alto, Cal­i­for­ni­abased Tesla’s plans. In 2006 — three years af­ter the com­pany was founded — CEO Elon Musk said Tesla would even­tu­ally build “af­ford­ably priced fam­ily cars” af­ter es­tab­lish­ing it­self with high-end ve­hi­cles like the Model S, which starts at $69,500.

This will be the first time many Tesla work­ers will be able to af­ford a Tesla.

Tesla started tak­ing reser­va­tions for the Model 3 in March 2016. Within a month, 373,000 cus­tomers had put down a $1,000 re­fund­able de­posit. Since then,

Tesla has re­fused to say how many peo­ple have re­served a Model 3, but its web­site says peo­ple mak­ing reser­va­tions now should ex­pect to get their car in the mid­dle of 2018.

Lisa Gin­gerich, a Mil­wau­kee-based at­tor­ney, re­served a Model 3 within min­utes of the or­der bank’s open­ing.

She doesn’t know when she’ll get to choose from the lim­ited num­ber of op­tions, in­clud­ing colour and wheel size, or when her car will ar­rive.

She’s bor­row­ing a friend’s Chevro­let Volt plug-in hy­brid while she waits.

COUR­TESY OF TESLA MO­TORS VIA AP

This un­dated im­age pro­vided by Tesla Mo­tors shows the Tesla Model 3 sedan. The elec­tric car com­pany’s new­est ve­hi­cle, the Model 3, is half the cost of pre­vi­ous mod­els.

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