More questions about Tesla’s Model 3: Can it be affordable yet special?

What’s that? There are more questions about Tesla’s Model 3, which had more than 325,000 “regular” (maybe) people plunking down $1,000 reservation fees for an electric car that in many cases they hadn’t seen or know much about?

We’ve written about some key questions about Tesla’s move to make its well-regarded electric vehicles more accessible to the masses, including the car’s true cost and whether the Palo Alto company — which has only released three other models and has had issues with tardiness — can deliver on time. (It says deliveries will start late next year.)

Now, former Apple executive Jean-Louis Gassee has more questions over at Monday Note: What about cost, production and competition?

Gassee’s concern about cost has probably crossed lots of other minds, most of all CEO Elon Musk’s: How do you make a luxury brand more mainstream without sacrificing what makes it special?

“Perhaps Tesla will be able to offer what Mercedes and others such as BMW and Audi excel at: Same Sausage, Three Lengths,” Gassee writes.

Gassee’s second concern, about production, is familiar. Last year, Tesla delivered 52,000 vehicles, and it expects to deliver up to 90,000 vehicles this year. It’s hard to imagine all 325,000-plus would-be buyers of the Model 3 will get their cars delivered by the end of 2017.

And it’s not just time that’s an issue, it’s money. Tesla had about $1.2 billion in cash at the end of 2015. And it’s not just time and money, sometimes there are unexpected issues. For example, Tesla said today it is recalling about 2,700 Model X vehicles built before March 26 because of an issue with the recliner in the third-row seats.

“Tomorrow’s Model 3 production system will need to be meaningfully different in order to achieve the volume and cost reductions that the Model 3’s affordable price tag requires… and reducing production costs means an additional capital outlay,” Gassee writes.

Finally, there’s the matter of the competition. The Model 3’s official starting price is $35,000, but Musk has said he expects the average cost of the car, with options, to be about $42,000. Gassee points out that there’s a lot of competition in that price range, from Hondas to Toyotas to BMWs. Do you look at just electric vehicles as the Model 3’s rivals? Probably not.

 

Photo: Tesla Motors unveils the new Model 3 sedan at the company’s design studio in Hawthorne, Calif., Thursday, March 31, 2016. (Justin Pritchard/Associated Press) 

 

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