The paint is barely dry on the first batch of Tesla Model X crossover SUVs, and the automaker's attention is already shifting to the Model 3, its long-awaited entry-level model.
On a shareholder call Wednesday, Tesla CEO Elon Musk confirmed the company will reveal more details about its pivotal new model on March 31, at which point showrooms will begin accepting $1,000 reservations. It's worth noting that the placeholder fee is markedly less expensive than the $5,000 required to get in line for the $80,000 Model X. Online reservations for the Model 3 will fire up on April 1, with Tesla insisting it will start deliveries in 2017.
The Model 3 can't come soon enough. While sales of Tesla's 4-year-old Model S were up last year, Model X production has been slow to ramp up, and in either case, the company is hemorrhaging money.
Tesla lost $889 million last year -- a record -- partially due to new model development costs and partially due to construction costs associated with its Nevada-based battery Gigafactory. Tesla has lost money for each of the last eight years. As of late, shareholders have been punishing the company's stock price, which closed at $150.43 Thursday, up nearly 5 percent but well off its 52-week high of $286.65 in July.
It isn't immediately clear if Tesla will reveal the Model 3 in full next month, and details remain murky. The car is expected to be roughly the size of a BMW 3 Series (read: compact), and take on cars likeand GM's forthcoming , which is also expected to have in excess of 200 miles of range.
If Tesla's Model X delivery schedule is anything to go by, it's not clear how quickly reservation-holders will be able to park a Model 3 in their driveway. The Silicon Valley automaker promised to start Model X production in 2015, which it did -- barely. Although deliveries began in September, just 206 examples found homes in 2016, and production remains at a trickle.
It's also not clear how expensive the Model 3 will be when it arrives. Musk confirmed on Twitter that production won't start with a pricier Signature Series a la Model S and X, and officials have repeatedly insisted that the car will start at as little as $35,000. Federal and state tax credits promise to slash as much as $13,500 from that bottom line, which would make the Model 3 the company's first truly affordable automobile.
However, federal credits start phasing out when a carmaker sells over 200,000 EVs, a threshold many analysts believe Tesla will cross sometime in 2018. Said another way, by the time the Model 3 arrives in real volume, such incentives may already have started to disappear.
To this point, Tesla has essentially had the luxury EV market all to itself. However, the Model 3 will likely be the company's biggest challenge to bring to market, and by the time it arrives, it will face levels of competition it hasn't experienced before from mainline automakers.
Tesla's next 18 to 24 months figure to reveal a great deal -- not just about the Model 3's viability, but about that of the company itself.