Elon Musk, Tesla’s Chief Executive Officer, on Friday 28th July 2017 handed over the first 30 Model 3 electric cars to employee buyers and set the stage for what seems to be the biggest test yet of the company’s strategy to rake in profits from the mass production of electric cars. Elon went on to further add that the Model 3 had crossed the half a million mark for reservations.
Outside Tesla’s Fremont factory in California, Musk showed off the $35,000 automobile. The automobile covers a distance of 220 miles (350 km) when fully charged. He took to the stage driving a red Model 3 and went on to further remark that Tesla had produced 50 Model 3 vehicles so far, including 20 for test purposes.
“Building an electric car was quite a challenge during the early days of production,” remarked Elon hours before the event. He added, “We are going to go through at least six months of manufacturing hell for the electric car to become a reality.”
373,000 reservations had been recorded in April 2016, but the numbers rose to over half a million. Interested buyers pay $1000 deposit upfront. The deposit is refundable and subject to tax credits. “New buyers are not likely to receive their cars until the end of 2018,” commented Tesla’s Chief Executive. A longer-range version of the Model 3 electric car is valued at $44,000 and can be driven for 310 miles (500km) on a single charge. A streamlined dashboard without buttons or knobs and a 15-inch touch stream display to the driver’s right side feature in the car.
Tesla admitted to major hurdles living up to the Model 3 hype saying that the 500,000 vehicles that it vows to produce next year will cost them nearly six times the 2016 production. Were they to sell 500,000 cars in a year then they would most likely outsell the BMW, Mercedes, and Lexus brands that are common in the United States.
Production delays and quality issues were highlighted during the launch of Tesla’s Model S and Model X vehicles. The company pinned this on production problems for a shortfall during the second quarter of the year. A simple design in the Model 3 will greatly avert potential assembly line problems.
2 billion dollars in cash had been used this year ahead of the launch. A troubled Model 3 launch could heighten the risks for the company while a steady delivery would generate a stream of income that would put the company afloat. Tesla faced an earlier embarrassment when they had to go to the capital markets for operation funding.
Since January, Tesla’s share price surged by 54 percent in the wake of the much-awaited launch of the Model 3. Currently, Tesla’s pricey valuation exceeds that of traditional rivals such as General Motors Co and Ford Motor Co.
To date, Tesla has operated as a niche producer of luxury electric vehicles with a charismatic showman executive who regularly interacts with his social media fans.