Tesla unveiled its long-awaited, much-hyped electric Model 3 Thursday night. Here’s a look at some burning questions surrounding the launch, and the numbers that are key to answering them.
Can I afford the car that’s being billed as the Tesla for the masses? Tesla CEO Elon Musk said the Model 3, which can run 215 miles on a single charge, comfortably seat five adults and go from 0 to 60 mph in under six seconds, will cost $35,000. But some people — including those who may have already plunked down a $1,000 reservation fee — are counting on tax credits to lower that cost. As the Mercury News’ Louis Hansen wrote, California buyers could see a reduction of up to $10,000, which includes a $7,500 federal tax credit. But the federal tax credit phases out after the company sells 200,000 of the cars.
Which brings us to the number of reservations Tesla Motors has so far. During Thursday night’s unveiling in Hawthorne, Musk said the Palo Alto company had received 115,000 reservations so far. This morning, Musk tweeted that the number of reservations had grown to 180,000. It seems safe to assume that if you haven’t made a reservation yet, time is running out to take advantage of that federal tax credit.
Can Tesla really deliver the Model 3 next year? Musk said during the unveiling that the company will begin deliveries next year. Then he added, “I do feel fairly confident it will be next year.” Then he laughed, and because it was a feel-good event, people laughed with him. But Tesla has been known to blow deadlines because of various factors. For example, the Model X SUV made its debut in 2015 a couple years late, partly because of problems with its falcon-wing doors.
Key thing to watch: The number of reservations for the Model 3 exceeds the number of cars Tesla has ever made, which is about 100,000. This means the company will have to rev up production, perhaps like never before.
Some analysts who toured the company’s Fremont factory recently were impressed by the upgrades they saw, which Bloomberg reported totaled $1.6 billion last year and included improved output and faster assembly lines. And the company has stepped up hiring recently and is expected to add thousands more jobs in the next few years.
Can Tesla afford the Model 3? It’s a publicly traded company with a rock-star CEO, but compared to other car companies Tesla’s still a startup. Musk offered a reminder of that during last night’s unveiling, when he thanked current Tesla owners for making the mass-market Model 3 possible.
“The revenue from the Model S and the X is what’s needed to develop the Model 3,” Musk said. “To all of you who bought an S and an X, thank you for helping pay for the Model 3.”
Making cars is expensive. Tesla not only has to make the electric cars, it has to invest in the infrastructure to support it. Think Superchargers and destination charging stations, whose numbers Musk promised to double and quadruple by the end of next year.
At the end of 2015, Tesla had just about $1.2 billion in cash on hand, and its cash flow was negative.
In his tweet this morning, Musk said the 180,000 reservations probably represents about $7 billion in revenue, give or take a few thousand in options for the $35,000 car.
All the excitement surrounding the Model 3 might help, too. Tesla shares are up about 2 percent, and are up about 63 percent since mid-February.
Photo: The Model 3, Tesla’s $35,000 electric sedan, was unveiled Thursday, March 31, 2016. (Tesla Motors via AP)
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