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Tesla to add cheaper third model by 2017

Could a new Tesla cost $30,000 and still amaze the crowd? Time – and money – will tell.

By Clifford Atiyeh Jun 5, 2013 1:56PM
Tesla Motors will sell a smaller car within four years for half the price of its Model S sedan.

CEO Elon Musk told investors during a shareholder meeting on Tuesday that the electric automaker would build a third car between 2016 and 2017 on a new platform. Tesla's second car, the all-wheel-drive Model X, hasn't been built yet. It's slated for production in late 2014.

While mainstream automakers have been cutting prices on their electric vehicles left and right, Tesla may not have the pricing flexibility to risk losing money, as Honda, Nissan, Ford and General Motors are most certainly doing. Still, Musk said he wanted to limit the final price to reach more buyers.

Tesla expects to deliver 21,000 cars to customers by year's end – it has already shoveled out 4,900 Model S sedans in the first quarter – and is banking on more sales to lower prices.

“On the other hand, we will have a much higher volume over which to divide fixed costs,” he said. “I’d rather sell a car for less in that case than necessarily try and get the highest gross margin.”


The Model S starts at $62,400, which could mean that the new, unnamed Tesla could cost $31,200. Or, if Musk means "half the price of most Model S cars" – which include the largest 85-kilowatt-hour battery pack and fast-charging options – it could be more like $50,000. While Musk didn't divulge details, that kind of price could make it competitive with Cadillac's upcoming ELR coupe, a plug-in hybrid expected to cost $60,000.


Unlike other startups such as Fisker, Tesla has reported strong financial health. Two weeks earlier, it repaid a $465 million federal loan nine years early. Its stock price is more than double that seen two months ago, no doubt spurred by the company's first-ever profit recorded in the first quarter.


“Even if we absolutely suck at cash management, we’ll still do OK,” Musk said.


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[Source: Tesla]
1Comment
Jun 8, 2013 2:42PM
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I want to buy a Tesla just to taunt the local car dealers. I love what this company is doing to change the industry and cut out the middlemen.
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