If Apple really is planning to sell an electric car in 2019-2020, the company now has its work cut out for it. Yesterday, Tesla's CEO Elon Musk introduced the Model 3 in Hawthorne, CA. This next generation electric car will go into production in 2017, have a range of just over 200 miles, and the price will start at US$35,000. However, expected accessories will raise the price several thousand dollars.
Image credit: Reuters, Tesla
The lower price is enabled by economies of scale. Reuters reports:
Tesla says scale from the massive facility [nearing completion in Nevada] will cut the cost of its battery pack by 30 percent to enable the lower-priced vehicle.
A boatload of people stood in line yesterday to pre-order, coughing up $1,000 to pre-order a Model 3, sight unseen in many cases. CNBC wrote:
Tesla CEO Elon Musk said the company received 198,000 Model 3 orders in 24 hours. In a tweet Friday, he touted a 'bright' future for electric cars.
About half of those 200,000 pre-orders are expected to convert into a final sale. Even so, Tesla will be pressed hard to deliver all the pre-orders, according to the above reports.
The Model 3 forms the basis of Tesla's goal to sell 500,000 cars per year by the year 2020, the year Apple is expected to start shipping. (If rumors about Apple's "Titan" project are to be believed.)
Heretofore, electric cars have constituted about 1.4 percent of all new car sales in the U.S. Factors that have kept sales from taking off for pure electrics include limited range in most models and associated "range anxiety" which means fear of depleting the battery and getting stranded, the availability of charging stations and the added cost of the batteries.
Tesla will have competition not from Apple in four years, but from GM's Chevy Bolt this year. The Bolt will be similarly priced and have a similar range. Also, I expect the already modestly popular Nissan Leaf to up its game and better compete with Tesla and GM.
All in all, it looks like the pure electric car has arrived. Other car manufacturers, who were in planning stages or had first generation vehicles like the BMW i3, are probably more alarmed now than they were last week.
Tesla has built a strong brand, has garnered much public enthusiasm with its new technologies like Autopilot and Ludicrous mode, and has been stealing the news cycles more than any other car company. Some other car companies will move into a higher gear and some will try to rationalize their cautious efforts.
But with Tesla, today, it's game on. No pressure, Apple.
Next page: The Tech News Debris for the Week of March 28th. Apple needs to become its own bank.