What happens when a $35,000 Tesla arrives?

Tesla revealed this week that its more pedestrian vehicle will be called the Model 3. That is expected to retail for about $35,000. We asked an expert about the prospects of a "cheap" Tesla.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
Brooke Crothers
3 min read

The all-electric Tesla Model S starts at around $70,000: A model for half the price could be a game-changer for Tesla. Tesla

What happens when a much more affordable Tesla arrives? An expert offered his thoughts to CNET.

Tesla said this week that its $35,000 entry, due in 2017 (or thereabouts), will be called the Model 3. One of the keys to making a cheaper Tesla is battery technology, as CEO Elon Musk pointed out to Auto Express earlier in the week.

I chatted with John Voelcker, senior editor for High Gear Media, which publishes Green Car Reports, in the wake of the news. He offered insight into what impact a lower-priced Tesla might have.

Q: Tesla has sold very pricey cars to date. How might a $35,000 Model 3 shake things up?
John Voelcker: A list price of $35,000 is a very nice place to be as compared to the current Model S, which is selling well for its category, but this is a category that starts at $70,000 and goes up to six figures. So, if Tesla can in fact introduce the Model 3, as it's now called, at a base price of $35,000 with a 200-mile electric range, that will take them into a whole new order of magnitude of volume.

Why can't they do that today?
Voelcker: Lithium ion battery costs need to come down (as one salient reason), both through advances in technology and higher volumes. They made the Roadster, which was a two-seat performance car. They made 2,500 of those. They've made more than 50,000 of their Model S sedans. Once you get into volume manufacturing, like the Model 3 that Musk described, then you're talking not about tens of thousands of cars per year but, ideally, hundreds of thousands of cars per year. That battery production capacity doesn't exist. That's where the gigafactory comes in. Musk said we can't do the Model 3 unless we have that factory.

What do you attribute the American public's fascination with the Tesla to? This could trigger a sales surge, correct? It seems to me that a lot of people are waiting on the sidelines for a more affordable Tesla.
Voelcker: Tesla has had an ability to market itself without actually paying for much marketing and attract tens of thousands of devoted followers. It has grabbed the imagination of the technology-following public and the car-buying public in a way that I don't think [has] very many other parallels. If the company can deliver a stylish design with a 200-mile range or greater and can use the existing supercharger network of recharging sites all over the country -- and the world -- at a price of $35,000, I suspect there are a large number of people who will line up to buy one.

That said, Tesla may not be as alone offering such a car as they have been. [Others] could produce a car as good and as stylish. By the time the Model 3 begins to be delivered to customers you will have vehicles with similar specifications both from Nissan -- which has sold more electric cars than anyone else in the world -- and GM, who has a 200-mile electric car [in the works].

The fact the Tesla even exists is a bit a of miracle, don't you think?
Voelcker: When's the last time a group of entrepreneurs started a car company from the ground up, whose brand is still with us today? The answer to that question: 1924.