Tesla Is About To Unveil Its Newest Electric Car, But Does It Matter?

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Chris White Tech Reporter
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Tesla CEO Elon Musk will begin delivering the automaker’s long-anticipated Model 3 vehicle Friday, but the electric vehicle market is becoming so crowded that the newest Tesla model could get lost in the clutter.

Tesla is set to deliver a wave of Model 3s to the first 30 people that dropped hundreds of thousands of $1,000 deposits on the vehicle more than six months ago. Many analysts believe the $35,000 vehicle could make or break Tesla, but the introduction of car markets such as Audi and Chevy could complicate Tesla’s plans.

One of Musk’s biggest hurdles is the Tesla’s auto-driving feature. The company has been charging customers an extra $3,000 on top of the price of a standard vehicle for an option called “Full Self-Driving Capability,” even though that feature is currently inoperable.

Musk hinted in January that those fully self-driving features would begin rolling out at the Model 3 launch. He told his Twitter followers in January that they should expect such features in “3 months maybe, 6 months definitely,” a date that coincides with the July 28 roll-out.

Tesla’s competitors have had ample time to ratchet up their campaign against the automaker. Audi argues that its 2018 A8 will include Level 3 autonomy, allowing drivers to safely careen down the highway without paying attention to the road conditions.

There are also serious questions as to whether the base model will have the same range as the similarly priced Chevy Bolt, which has the capacity to run more than 238 miles before needing a charge. Tesla claimed last year that the Model 3 would run more than 215 miles per charge.

Tesla has been testing a 70 to 75 kWh battery on the Model 3, which could boost the range above 250 miles. The only electric cars capable of hitting 300 miles are Tesla’s Model S and Model X, both of which have a price tag of $100,000. The cost would put the Model 3 on par with the Audi A8.

Production on the highly touted vehicle will expand from 100 cars in August to 1,500 in September, and plateau to 20,000 per month in December. Musk plans to eventually build 20,000 cars a month. It’s an aggressive schedule, but producing only 130 vehicles in a month could potentially allow the likes of BMW and Chevy to catch up.

Some analysts have criticized the relatively slow production buildup.

“The stock is down on the news that they are only producing a small number of cars tomorrow, and it may be years before customers finally receive their vehicles,” Matt Stack, a tech analyst and founder of XLP Capital, told The Daily Caller News Foundation. “It’s a nonevent. They only have a small number of cars to show for the effort.” Tesla’s stock has tumbled slowly since Musk announced the Model 3’s big day.

“In that many years, one thing you can be sure of is that companies like BMW will start producing these cars,” he added. “By now, you’ve given other automakers to come up with their own sleek designs on inexpensive EV cars.”

The California-based automaker raised its market capitalization to $51 billion, a number that is valued at about $1.7 billion more than GM. The two companies wrestled for supremacy during early trading Monday. There is significant debate over whether Tesla’s recent surge is sustainable, given the company’s chronic inability to deliver products on deadline.

“It’s ridiculous,” Philip Davis, a co-founder of PSW Investments, told TheDCNF in June after Tesla stepped in front of Ford to become the second most valuable auto company in the country. He believes many investors don’t care a wit about whether Musk can produce a viable product.

Another analyst argued Tesla will eventually have to up the ante before Wall Street will fully buy into the hype.

“Is it fair? No, it isn’t fair,” Maryann Keller, an auto-industry consultant in Stamford, Conn., said of the Model 3 maker’s recent fortunes. “Even if Tesla turns a profit, they will eventually have to make enough to justify this valuation.”

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