Tesla Inc.’s (NASDAQ:TSLAF) long-awaited mass-market car, the Model 3 is expected to beginning rolling off the assembly line this coming Friday. The car has passed all regulatory requirements – two weeks ahead of schedule no less – and early production line issues appear to have been resolved.
The first 30 customers will get their cars in a ceremony at the end of July. The company said it would produce more than 1,500 Model 3’s in September and by the end of the year as many as 20,000 vehicles a month.
Half A Million Cars By 2018
If all goes according to plan, Tesla hopes to product a half-million cars by 2018. Last year the company’s production was only 85,000 automobiles. The Model 3 will be available in multiple colors and with a choice of wheel sizes. Eventually there will be two motor options – one for the highway and one optimized for in-town driving.
What’s not known is how the various configurations and options will affect the $35,000 price tag of the Model 3. Some analysts worry that too many options will raise the price well above its attractive initial selling price.
Average Priced Electric
The main selling point behind the Model 3 is the opportunity it gives average car buyers to “go electric.” Tesla and CEO, Elon Musk, are betting there are millions of those types of buyers out there. So far the only number Tesla has released is that there are 373,000 would-be Model 3 owners already signed up.
Ironically, according to Musk, the development of the Model 3 was bought and paid for by those who purchased Tesla’s initial high-priced offerings like the Model S, Model X and luxurious Roadster, priced at $100,000. According to Musk, “With any new technology, it takes multiple iterations and economies of scale before you can make it affordable.” A mass-market car, Musk said, “was only possible to do . . . after going through the prior steps.”
Limited Federal Tax Credit
Those who purchase a Model 3 might receive an attractive $7,500 federal tax credit. There are caveats. First you must owe at least $7,500 in taxes to get the credit. Second and more importantly, you might take ownership of a Model 3 before the 200,000th vehicle rolls off the assembly line.
According to a Teslarati columnist, “buyers who take delivery of their Teslas within roughly the first year-and-a-half of the company hitting its 200,000th electric vehicle delivery in the U.S. will be eligible for the tax credit. The closer to the 200,000th delivery date, the larger the credit.”
And Then There’s China
Much as Tesla wants to become the carmaker of the future, it has a problem in the world’s largest country and potentially largest car market – China. Morgan Stanley analyst Adam Jonas says Tesla could face roadblocks as it tries to sell its high-tech cars in that country.
The problem is data. Tesla cars produce and collect a lot of data. Chinese officials, Jonas thinks, may not want to let Tesla control that data. Allowing an American company to have unfettered access to real-time passenger and vehicle information does not seem likely to Jonas.