Daily Management Review

First Model 3 Electric Cars Handed Over To Early Buyers By Tesla’s Musk


07/29/2017




Setting the stage for the biggest test yet of the company's strategy to become a profitable, mass market electric car maker, as he handed over the first 30 to employee buyers, Tesla Chief Executive Officer Elon Musk said on Friday the Model 3 had over half a million advance reservations.
 
Marking a departure from the company's earlier luxury electric cars, Musk showed off the $35,000 base vehicle with a range of 220 miles (350 km) on a charge outside Tesla's Fremont, California factory.
 
Tesla has produced 50 of the vehicles so far, including 20 for testing purposes, said Musk while taking the stage driving a red Model 3.
 
It would be "quite a challenge" to build the car during the early days of production, acknowledged Musk hours before the event.
 
"We're going to go through at least six months of manufacturing hell," Musk told journalists.
 
From about 373,000 disclosed in April 2016, the over half a million reservations are up. Customers pay $1,000 refundable deposits for the car, which is eligible for tax credits.
 
Musk said that until the end of 2018, any new buyers would likely not receive their car.
 
Priced at $44,000 and will drive 310 miles (500 km) on a single charge is a longer-range version of the car. With a 15-inch touchstream display to the right of the driver, the cars feature a streamlined dashboard devoid of buttons or knobs.
 
In order to live up to the Model 3 hype, Tesla faces major hurdles. Nearly six times its 2016 production is the 500,000 vehicles Tesla vows to produce next year.
 
The company would likely outsell the BMW, Mercedes, or Lexus brands in the United States, if Were Tesla were to produce and sell 500,000 cars per year.
 
The company blamed production problems for a shortfall during the second quarter of this year as the production delays and quality issues marred the launches of Tesla's Model S and Model X vehicles.
 
Potential assembly-line problems would be greatly reduced by a simpler Model 3 design, Musk has said.
 
Ahead of the launch, over $2 billion in cash so far this year has bene burned by Tesla.
 
Tesla would be allowed to avoid going again to the capital markets to fund its operations by a steady delivery of Model 3s that could generate a stream of cash and hence a troubled Model 3 launch could heighten the risks for the company.
 
Tesla's pricey valuation now exceeds that of traditional rivals like General Motors Co and Ford Motor Co. and its share price has surged 54 percent since January in anticipation of the Model 3 launch.
 
With a charismatic, showman CEO who regularly interacts with fans on his Twitter account, Tesla has operated as a niche producer of luxury electric vehicles until now.
 
For customers who are able to pay only a few thousand dollars more than the average price of a conventional car or truck sold in the United States, the loss-making Tesla is building vehicles in high volume as the company is trying to move into a different league.
 
(Source:www.reuters.com) 






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