Tesla Model 3 to roll off assembly line
The first Tesla Model 3 will roll off the assembly line at a Silicon Valley factory on Friday, and straight into a showdown for top affordable all-electric car with the Lake Orion-built Chevrolet Bolt.
The two all-electric cars have comparable pricing in the mid-30s, are quick off the line and can go more than 200 miles on a single charge. But that’s where similarities end.
The Model 3 is an unproven commodity from an upstart carmaker. The Bolt has the proven track record of the General Motors Co. name, but lacks the market excitement surrounding Tesla.
The Bolt has the advantage of being first to market, with the first cars going on sale in California late last year; about 4,300 have been sold this year. But when the Model 3 was unveiled more than a year ago, thousands put advance deposits on the car.
Tesla Inc. co-founder and CEO Elon Musk tweeted early Monday about the production and impending deliveries of the sporty all-electric sedan. He said 30 of the sedans should be ready for a “handover party” on July 28.
When the Model 3 was announced in April 2016, crowds lined up at Tesla stores — or went online — to put down $1,000 refundable deposits. The Palo Alto-based carmaker said more than 325,000 deposits were made in the first week. The company won’t say how many deposits it’s received since then. But Musk has said those placing deposits now won’t get their cars until the end of next year, indicating the total could be about a half-million.
The Model 3 is expected to have a sticker price of $35,000 before options, about half the starting price of its flagship Model S luxury sedan. A $7,500 federal electric vehicle tax credit brings that down to $27,500. Tesla says the car can go at least 215 miles per charge, and accelerate from 0-60 miles per hour in under six seconds.
By comparison, the Chevy Bolt starts at $37,495 before the $7,500 tax credit, and goes an estimated 238 miles on a charge. The first shipments of the all-electric crossover went to California in December. GM has slowly expanded the number of states selling the Bolt, and the all-electric car is expected to be available in all 50 states by August. Chevy delivered 1,425 Bolts in June, GM said Monday.
Car and Driver magazine clocked the Bolt at 6.5 seconds for 0-60 acceleration. Detroit News auto critic Henry Payne found the car such fun to drive that he entered it in a Sunday afternoon autocross.
Rebecca Lindland, a senior analyst at Kelley Blue Book, said there is excitement around the electric Bolt, but in the arena of cutting-edge vehicle technology, going up against Tesla is a tall task.
“There is a brand difference, and that’s the challenge that Chevy and GM face,” she said. “Consumers don’t necessarily appreciate GM in terms of being a technology company... The consumer looks at Tesla as the tech company and they look at Chevy as a domestically oriented carmaker.”
In a series of tweets Monday, Musk addressed production targets for the Model 3: “Production grows exponentially, so Aug should be 100 cars and Sept above 1500,” he tweeted. “Looks like we can reach 20,000 Model 3 cars per month in Dec.”
A Tesla representative declined to offer additional details Monday.
Some greeted Musk’s optimism about Model 3 production with caution Monday.
“That’s going to be a pretty tough ramp-up rate to meet,” said Sam Abeulsamid, a senior analyst at Navigant Research. “I’d be surprised if they can actually achieve that, but I wouldn’t entirely rule it out.”
Musk’s goal of 20,000 cars per month by December is half what Musk had previously set: He had said Tesla’s plant in Fremont, California, would be able to turn out 40,000 Model 3s by December.
Abuelsamid said Tesla has helped its odds with the Model 3 by limiting variations on the car at the assembly-line stage. Buyers, he said, will have limited colors and configurations to choose from. That simplified approach may help Tesla reach its early production goals.
Karl Brauer, executive publisher for Kelley Blue Book and Autotrader, said in email: “If Tesla ramps production to 20,000 units a month it will have substantially more cars to sell and service than in any previous time in the company’s history. Tesla’s current customer base has been pretty forgiving about the automaker’s quirks, but keeping that many new buyers happy will require a fully-functioning network of retail outlets and service centers.”
The company has a history of failing to hit its numbers: Tesla’s last new vehicle was the Model X SUV, which arrived 18 months later than initially announced. A year ago, it failed to deliver the expected number of Model S sedans and Model X for the first quarter of 2016. In 2014 and 2015, the company failed to deliver the number of vehicles expected.
The company said Monday it delivered about 22,000 vehicles in the second quarter, bringing first-half deliveries to about 47,100, with production slowed by a temporary shortage of battery packs. That fell within the lower end of the range of Tesla’s first-half guidance of 47,000-50,000 vehicles.
Shares of Tesla fell 2.5 percent in regular trading after Musk’s Model 3 comments. They fell slightly more in after-hours trading following release of the first-half results.
But investors who believe in the company have frequently driven up the stock price even after bad news. Tesla shares are up 65 percent since the first of the year. Earlier this year, Tesla’s valuation surpassed both Ford Motor Co. and GM, whose stock prices languished amid record sales and profits.
Even if the Model 3 does roll out on time, servicing all those vehicles will be a challenge. While Tesla is promising to increase its network of stores and service centers by 30 percent this year, it began 2017 with just 250 service centers worldwide. That leaves many potential owners miles from a service center.
Musk has said a new fleet of mobile service trucks will be deployed to help customers far from service centers.
Model S and Model X owners in some regions worry about having to share Tesla’s company-owned charging stations with an influx of new cars. Tesla also plans to double its global high-speed charging points to 10,000 by the end of this year.
Tesla’s growth is stymied in Michigan, where the company’s direct-sale business model is prohibited by state law. Michigan requires cars to be sold through dealerships, while Tesla owners buy their vehicles directly from the company.
Despite the Michigan roadblocks, Tesla has devised a way to bring information about their slate of vehicles to Michigan’s masses. In recent weeks, the company has toured the state with an Airstream travel-trailer that’s essentially a mobile design center for Tesla vehicles.
The trailer, hauled around by a Tesla Model X SUV, will be in several locations around Michigan through July.
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