Schumpeter | Tesla's Model 3

Selling SIIIX

The electric-carmaker is hoping for mass appeal with a cheaper model

By P.E. | DETROIT

EVEN though it has a backlog of customers waiting for its Model S sedan, Tesla has ceased production at its assembly plant in the San Francisco suburbs. But this is not because of financial or manufacturing problems. The electric-carmaker is simply retooling its factory for the forthcoming launch of its new Model X sport-utility vehicle. SUVs (and crossover models) passed a milestone in May by outselling sedans in the American market for light vehicles (36.5% to 35.4%). But if Tesla is hoping for mass appeal, the real breakthrough will be its third product line, the imaginatively named “Model 3”, which it will start selling in 2017.

At a starting price of around $35,000, a third of the cost of a top-range Model S, Tesla wants the car to compete against the BMW 3-Series and Mercedes-Benz C-Class sedans. With the Model 3 Tesla also hopes to settle once and for all concerns about the limited range and long charging times of electric cars. The Model 3 is expected to almost match the nearly 300-mile range of the bigger Model S. But it will probably not take so long to charge up. To do that and hold the selling price down won’t be easy. Industry analysts believe that the 85 kilowatt-hour lithium-ion battery now used in the Model S costs Tesla almost as much as the $35,000 at which it plans to sell its smaller sedan.

However, the Model 3 will benefit from the closer alliance of Tesla and its battery supplier, Panasonic. Elon Musk, the carmaker’s boss, has said the Model 3 will use a next-generation smaller, lighter and cheaper lithium pack. Tesla’s new “gigafactory” that will open somewhere in the south-western United States will also drive down manufacturing costs.

The company is taking other steps to address the drawbacks of battery power. It is setting up a network of so-called “Superchargers,” 440-volt DC systems that can yield an 80% recharge in about 30 minutes (pictured above). Although not as quick as pulling up to a gas pump, it is a big advance on current charging systems that can take eight hours or more. A Tesla team recently used the Supercharger network to make the coast-to-coast 3,300-mile drive from California to New York in 76 hours. Then, a challenge from a team sponsored by Edmunds, a car website, cut the time to 67 hours.

The demand for battery-cars could do with a jolt. In the American market all plug-based products, including pure battery-electric vehicles, or BEVs, like the Model S, as well as plug-in hybrids, such as the Chevrolet Volt, account for barely 1% of total new vehicle demand. Tesla sells just 3,000 Model S cars a month; Ford shifts about as many F-series pickups every 36 hours.

Whether the Model 3 will succeed remains to be seen. Incidentally, the car was going to be called the Model E, until Ford said it already had that name trademarked. That was a problem, Mr Musk lamented, as he already had an “S” and an “X” in his line-up. “This is crazy,” he tweeted, “Ford’s trying to kill sex! So we’ll have to think of another name.” And that’s why it’s going to be the Model 3, he went on, noting, “We’ll have three bars to represent it and it’ll be S III X!”

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