Tesla Model 3: Elon Musk’s first bet on mass market cars

Tesla has suffered production problems with its Model S and Model X for a short duration earlier this year. However, the simple design of Tesla Model 3 has the potential to reduce any major problem in the assembly-line.

By: | Published: July 29, 2017 1:23 PM

Tesla’s Fremont factory located east of San Francisco adjacent to the mountains was the place to be in as the company celebrated the handover of its Model 3 car to first thirty customers (other than Elon Musk ofcourse). The stage was set, on the black floor with red curtains and a grey background with a white Tesla logo there was Elon Musk standing and welcoming the crowd, media and Tesla employees as his ambitious project turned reality. Elon Musk had finally succeeded in manufacturing the ‘best’ car that $35,000 can buy, Elon Musk was personally involved and this Model 3 project was his baby from the start.  Musk simply told Journalists attending this mega event that “We put a lot of effort into designing the car. I don’t think you can find a better looking car at this price point.”  The base variant of Tesla Model 3 is sold in the U.S at $35,000, the car can do a 0-60 mph in about 5.6 seconds and has a range of 354 kilometers. Tesla Model 3 will also be available with long range version that claims to have a range of 500 kilometers and costs $44,000. The car also gets eight cameras and 12 ultrasonic sensors.

Elon Musk addressing the gathering at Tesla's Fremont Factory (Image Courtesy: Instagram)

Thank you to all our employees for your hard work making Model 3 a reality.

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Tesla currently has about 6,124 fast charging facilities (superchargers) in U.S and by the end of 2018 it aims to install 15,000 more chargers.  Tesla Model 3 has been a challenge for Elon Musk, the company has received over a half a million booking of this car worldwide and production has been a challenge. Just 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. Tesla also commits to manufacture 500,000 units of its Model 3 next year which is as much as six times of the units manufactured in 2016.

Model 3 production ramp

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If Tesla manages to manufacture and sell 500,000 units every year, the company is likely to outsell major car makers like Lexus, BMW, and Mercedes-Benz in the United States. Tesla has suffered production problems with its Model S and Model X for a short duration earlier this year. However, the simple design of Tesla Model 3 has the potential to reduce any major problem in the assembly-line. Elon Musk also said that “We have simplified the manufacturing process dramatically. In the same amount of space to build 50,000 cars, we can build 250,000 Model 3s” reported The Verge. Tesla has also spent over $2 billion in cash so far on Model 3 ahead of its launch.

Tesla Model 3 is the most important product for Elon Musk not just in the U.S but also globally, a troubled launch in U.S could saturate its pre-bookings in other parts of the world, while a smooth delivery of Model 3 would ensure steady profits which will result in the company not going to capital markets to fund its operations.  Moreover, Tesla also plans to enter emerging nations like India and in all probability a car like Model 3 will be the first product it launches in such markets due to its practical design.

Untill now, Tesla has operated as a niche manufacturer of electric vehicles and with Model 3 it attempts to enter the mass market segment. With this the loss-making company hopes to change its fortunes.

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