Tuesday, April 5, 2016

Massive Demand for the Tesla 3

The recent launch of the Tesla 3 proves that there is strong demand for a reasonably priced EV. As of the end of March people could preorder the Tesla 3 and judging by the number of people who lined up the car is being well received. Tesla's newest offering is among the first wave of affordable EVs with better range. The car costs around $35,000, and has a range of more than 215 miles. Considering that Tesla's Roadster cost 100k and the Model S costs $70K, the sticker price of the Tesla 3 is a bargain. The car will be available to the public in 2017 but interested buyers were already lining up and paying $1000 to order.

The Tesla 3 is far more attractive and sportier than the recently unveiled Chevrolet Bolt which made its debut at the January 2016 CES. The Bolt sells for around the same amount and has a similar range. Less expensive EVs are driving a transportation revolution.

The Bolt was among a number of hybrid and fully electric cars at the New York Auto Show.

In announcing the Tesla 3 Elon Musk the founder of the automotive brand provided a preamble that included a tutorial on climate change and the role that fossil fuels and the combustion engine play in driving global warming. The need for affordable electric vehicles to decrease our emissions is great and Musk is stepping in to meet that need.

Musk's business model is a good one. The idea was to build and sell high-end cars (Roadster and Model S) to finance more affordable mass marketed vehicles like the Telsa 3.

Musk indicated that advanced sales of the Tesla 3 launch worldwide orders were 276,000 worldwide. This translates to a staggering $11.6 billion. While the base price is around $35,000 the walkaway price is expected to average around $42,000. Musk expects that sales may reach a half a million units this year.

Tesla's recent share prices went from just over $141 to just under $250 early on Monday. This is their highest intraday price since early October.

EV's have fallen short and have yet to gain the respectability they deserve. However, the Tesla 3 looks as though it may be the breakthrough vehicle that makes it possible for EVs to proliferate. Led by better range and lower prices we may be on the cusp of a paradigm shift in the automotive sector.

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