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Tesla may unveil mainstream $40K model in 2015

Lower-cost EV essential to the upstart automaker’s future -- and could be a threat to high-volume car companies.

By Douglas Newcomb Dec 17, 2013 8:17AM

Tesla Model X. Photo by Tesla.Luxury car companies have had to take Tesla Motors seriously as its upscale Model S has become a success -- and has been outselling traditional high-end brands such as Mercedes-Benz and BMW in some regions.

Now mainstream automakers may have to do the same thing as Tesla is reportedly poised to unveil an electric car in early 2015 that would sell in the $40,000 range and be a volume vehicle that’s a key component to the fledgling automaker's future growth.

Although it started out with the Tesla Roadster -- a 2-seat sports car that only sold about 2,300 units worldwide and is no longer in production -- the company’s only current offering is the Model S sedan that starts at $71,070. That’s before any federal or state tax incentives for electric vehicles, and the price rises from there depending on options. Late next year, Tesla is scheduled to offer the Model X sport-utility vehicle (pictured above) that’s predicted to sell in a similar price range.

A lower-priced mainstream model that could hit the market in 2016 or 2017 may make its debut at the 2015 North American International Auto Show in Detroit, according to the Los Angeles Times. This would not only fulfill Tesla’s stated goal to offer a more affordable EV, but is also vital to the company’s long-term future.

And it could be a threat to mainstream automakers struggling to get traction with consumers in the EV market.

“This is hugely important for Tesla,” Thilo Koslowski, an auto industry analyst at Gartner, told the LA Times. “This is ultimately the car that will make Tesla a household brand rather than just something in the premium segments. No car company can live off 20,000 to 30,000 sales a year and be profitable in the long term."

But making the leap from a niche luxury brand to a mainstream car company has several hurdles, and producing a high-volume, lower-cost EV will require Tesla to overcome obstacles related to battery size, capacity and cost. By its own admission, Tesla will have to achieve a 200-mile driving range from a battery smaller than the one now available in the Model S, which has a maximum Environmental Protection Agency-rated range of 265 miles.

Koslowski said that a car in the $40,000 price range with a 200-mile range would give Tesla a leg up on mainstream competitors, and that traditional automakers may be unable to attain those cost and range goals for probably another year or two. But it will also be tough for Tesla.

“That's pretty ambitious to get there,” Koslowski said. “One hundred to 120 miles of range isn't enough for mainstream consumers to really feel comfortable.”

Then there’s manufacturing capacity concerns. Tesla plans to manufacture about 21,000 units of the Model S sedan this year, and projects to build double that number of the Model X in 2014. The Model S is assembled at Tesla's California Bay Area plant. The company currently uses only about a quarter of the former General Motors-Toyota assembly plant’s 5 million square feet of space, and this is also where the Model X will be built.

Essentially, the same rear-wheel-drive platform will be used for the Model X, with another electric motor added to drive the front wheels so that the new vehicle is all-wheel drive. And although the Model X will sit higher than the Model S and will include gullwing-style doors for easier access to second and third row of seats, the platform for the mainstream model reportedly debuting in 2015 will be significantly different.

If automakers have any doubts about Tesla’s plans to disrupt the mainstream car market the way it has caused concern among luxury brands, they should go back and read the strategy that Tesla CEO Elon Musk mentioned in a 2006 blog post.

“The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium,” he wrote. “Then drive down market as fast as possible to higher unit volume and lower prices with each successive model.”

[Source: Los Angeles Times]

Dec 29, 2013 12:11AM
Go Tesla!!  Our country needs this to be successful.  I so want to be able to thumb my nose at those oil producing countries who have given us so much trouble over the past 30 years(or more).   Now, I just hope we also see fit to downsize our military and spend OUR money on infrastructure and JOBS.  We were in dire straits 5 years ago in 2008 and have managed to weather the financial storm and if we continue to go forward by putting our country first we have the potential to once again have a nation that takes care of its own people and is admired and envied, not hated, by those in other countries.   
Dec 29, 2013 1:24AM
It is time for the evolution of the automobile.  Plug in cars and wind turbines are a move forward. We still have range issues and cold climate issues. Like wind turbines electric cars are only practical in some areas. Here's to the future and the electric car!  Happy New Year everyone.
Dec 29, 2013 8:19AM
Tesla makes not only a very nice looking car but one that runs on just electric.Great job and gets 300 miles per charge thats great also and adding road side charging station that again great and with making a vehicle cheaper this will help alot of people...Keep up the good work...Only problem I see is Oil companies are not going to take this lying down,nor the government will find new ways to tax these.To Bad because the world needs inovation like this and others.
Dec 29, 2013 7:17AM
Batteries are old technology. There needs to be a different line of thinking and technology for the electric car to be successful. The auto industry has been talking about electric cars for many moons. They have a ways to go here, but as we all know money helps the development along. Can you imagine in 20 years the only cars on the road are electric? How nice that would be for air pollution, and no foreign oil imports. And Yes, there is a cost, but that's a price that will improve the quality of life.....
Dec 29, 2013 10:26AM

Tesla cars are awesome, they are going to succeed because the public not only wants this but needs this. low cost solar stations need to be set up across the country so all can be covered.

   FACT covering  only 15% of Nevadas worthless desert  with solar panels would be enough to power the entire US with power and be almost free once set up. 

   And why is it not law that all new home construction mandate NANO solar panels to be included in design.  and for all those that say what if the sun doesn't shine, there is sun somewhere in the Us at any given time to provide over 100 times the power using solar than the country can use.

Dec 29, 2013 8:15AM
Where does the power come from to charge the rare earth batteries?
Dec 29, 2013 3:37PM
Awesome. Tesla is the future of the automobile industry and one of the best cars on the market today if not the best (it certainly is the best EV). I hope that Elon doesn't sell the company as for I feel that his guidance is needed so that the industry is not manipulated unfairly towards EV's as has happened in the past.
Dec 29, 2013 12:25AM
Good luck with that thought especially with the current leadership. 
Dec 29, 2013 6:24AM
Where does the power come from to run the heat or air-conditioning? Directly from the same battery that is giving you your driving range?
Dec 29, 2013 5:54AM

and what never spoken of is how much the cost is to recharge ,

utility companies will just continue to raise rates become the new oil companys

the reason china is building wind generators all over the world

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