Tesla Motors built its reputation making sporty, sexy and very expensive electric cars with range superior to other electric vehicles. Now, Elon Musk's company is staking its future on something relatively affordable.
Tesla plans to unveil its Model 3 electric car around 8:30 p.m. PT Thursday at its Los Angeles design studio. At a starting price of $35,000 — before federal and state government incentives — the Model 3 is less than half the cost of Tesla's previous models. The car is expected to have a range of at least 200 miles when fully charged, about double what drivers get from competitors in its price range, such as the Nissan Leaf and BMW i3.
In scenes normally associated with the sales of much-anticipated new iPhones and gaming consoles, campers lined up overnight at the company's Burbank store on San Fernando Road and other locations ahead of the unveiling.
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Long lines were reported from Hong Kong to Austin, Texas, to Washington.
Some campers said they were ready to make a desposit to reserve a Model 3.
"For me, personally, I just wanted to one of the first in line to get the tax credit," said Peter Peng, who was at the Burbank store Wednesday night. "To me, this is bigger than the iPhone, it's bigger than the X-Box. It's a car. Tesla is such an innovative company on the cusp of cutting edge technology. It's the first affordable car in its range."
Campers cited a broad range of reasons for their dedication to a brand that has developed Apple-like loyalty. Some liked the unrivaled range. Others were attracted to the style, technology and performance.
Shayan Keshmairn arrived at 4 a.m. The lower price and impressive EV range convinced him to get up early and visit the Burbank store.
"You don't really know anything about it until 8:30 tonight," said Keshmairn. "There's been speculation, and if you don't like it the $1,000 is refundable."
Tesla has said that deposits are "fully refundable" and can be applied to the purchase of a Model S or X.
Then, there was Mike Nescovic from Serbia.
"I am great Tesla fan, and for me this is patriotic duty," said Nescovic, wearing a jacket and stocking hat outside the Burbank store. "I'm from Serbia, and Nikola Tesla, scientist, was from Serbia."
"It's an amazing vehicle," he said.
The company does not use a traditional dealer model to distribute and service its vehicles. The Burbank store is one of 11 from Laguna Niguel in Orange County to the San Fernando Valley. Campers also waited overnight at stores in the Bay Area.
The Model 3 is the most serious test yet of 13-year-old Tesla's ability to go from a niche player to a full-fledged automaker. It could be the car that finally makes electrics mainstream — or customers could be scared off by Tesla's limited number of stores and service centers. Either way, the Model 3 is already changing the industry, spurring competitors to speed development of electric cars and improve their battery range.
"The Model 3 is going to be a pivotal model for Tesla," said Patrick Min, a senior analyst with the car buying site TrueCar.com.
Tesla didn't release details about the car before the event. Potential buyers could start putting down $1,000 deposits Thursday for the Model 3, which is scheduled to go on sale at the end of next year. Tesla's web site suggested visiting a store or making a reservation online.
Right now, Tesla sells two vehicles: The Model S sedan, which starts at $71,000, and the Model X SUV, which starts around $80,000. But a lower-priced car has been a longtime goal of Tesla CEO Elon Musk. In a 2006 blog post, Musk said Tesla planned to build "a wide range of models, including affordably priced family cars" in order to speed the world toward a solar-powered future.
The Model 3 puts Tesla within reach of millions more customers. Last year, only 2.1 percent of new cars purchased in the U.S. cost $75,000 or more, but 35 percent — or 5.5 million — cost $35,000 or more, according to TrueCar. The Model 3 is a critical part of the money-losing automaker's plan to increase sales from around 85,000 this year to 500,000 by 2020.
But Tesla faces several hurdles. U.S. buyers remain skeptical of electric cars, and low gas prices haven't helped already anemic sales. Sales of new electric vehicles grew 6 percent in the U.S. last year, but they still remain less than 1 percent of the overall vehicle market, according to IHS Automotive. Tesla also faces growing competition from big, deep-pocketed rivals like General Motors Co.
What we know about the Model 3:
WHEN WILL IT GO ON SALE? Tesla has said it expects to start Model 3 production at its Fremont, California, factory at the end of 2017. But the company has a history of delays. The Model X, which went on sale last fall, was initially due to go on sale in early 2014. Musk said last month that the Model 3, unlike the Model X, is designed for "ease of manufacturing." Still, some analysts are doubtful. Morgan Stanley auto analyst Adam Jonas thinks Tesla won't start building the Model 3 until the end of 2018.
WHO ARE ITS COMPETITORS? General Motors is set to start selling the Chevrolet Bolt electric car at the end of this year, a full year before the Model 3. The Bolt will have a similar price tag and a 200-mile range. Hyundai's Ioniq, which has a 110-mile electric range and could match Tesla on price, goes on sale this fall. Audi will follow with an electric SUV in 2018. Musk said last month he's not worried. He thinks the Model 3 will compete most directly with small luxury cars like the Audi A4 and the BMW 3 Series.
HOW DID TESLA MAKE THE MODEL 3 LESS EXPENSIVE? Cheaper batteries. Tesla previously assembled its battery packs with battery cells made in Japan by Panasonic Corp. But Tesla and Panasonic are building a massive, $5 billion factory in Nevada which will supply batteries for the Model 3. Tesla says the scale of the factory will lower the cost of its battery packs by 30 percent.