In 2006, Elon Musk shared his “secret master plan” for Tesla Motors – to build an affordable electric car. A decade on, with the unveiling of a prototype of the Model 3, which is expected to go into production in 2017 at a starting price of $35,000, it seems the Tesla CEO is close to fulfilling his ambition.
The mass-market Model 3 has been described as Tesla’s ‘iPhone moment’. Around 200,000 people placed orders within 24 hours, even though the vehicle is expected to be more than a year away from production. In scenes reminiscent of Apple product launches, thousands queued and even camped out overnight outside stores to hand over deposits.
This will come as welcome news to Musk, who has invested billions and a decade working towards the Model 3’s development.
In his 2006 blog post, the entrepreneur said his aim was to speed up the transition from a “mine-and-burn hydrocarbon economy towards a solar electric economy” that is sustainable and environmentally friendly.
Musk explained that Tesla’s strategy was “to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model”.
He went on to summarize how he would achieve his plan:
“Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options.
Don’t tell anyone.”
How did he do it?
In 2008, Tesla launched its sporty Roadster. Next came the Model S in 2012, starting at $70,000, followed by the Model X SUV in 2015.
The pinnacle was the introduction of the Model 3. Tesla’s lowest-priced vehicle so far has a driving range of around 200 miles on a single charge.
However, the journey hasn't always been smooth – the electric car company has faced production problems, including the latest shortfall in Model X cars, which Tesla blamed on its own "hubris" for cramming the Model X with too much technology, making it difficult to produce in volume.
What’s the competition?
The Model 3 will face strong competition from several new hybrid and electric cars including GM’s forthcoming Chevrolet Bolt, which is expected to have around 200 miles of electric driving range and a starting price of around $35,000. Plus, Nissan’s Leaf is set to offer more driving per charge at a similar price.
Other obstacles to overcome include low fuel prices, battery costs and uncertainty around investment in recharging infrastructure.
However, the cost of electric vehicle batteries has fallen steeply over the past five years. Studies say the cost of batteries would need to drop below $150 per kilowatt hour (kWh) for electric vehicles to match petrol engines, and new research suggests we are approaching this tipping point.