Tesla To Offically Announce Model 3, Here’s What You Should Know


Tesla Model 3, the affordable luxury vehicle that will be announced by Tesla Motors on Thursday, may be somewhat cheaper than its other siblings, but the lower price might not be enough to help the company solve its existing problems.

Colin Langan, a UBS analyst, said in an interview on Monday that the California-based manufacturer should be very careful on its next steps.

“I think there are a lot of reasons to be really cautious,” said Langan during his appearance in CNBC’s Closing Bell. “They’re burning cash at this point, so that’s another critical risk that investors should be focused on.”

Model 3 is a relatively affordable luxury model car, which only costs $35,000 and should begin production by the end of the year. The first Model 3 cars are expected to hit the market next year.

Once launched, Tesla Model 3 will become the world’s cheapest electronic luxury car on the market. However, it is important to point out that the price still does not include federal and state incentives that the government provides for electric-powered vehicles.

Meanwhile, Tesla Motors also has two higher priced models, the Model S, which costs $70,000, and Model X, whose price ranges from $132,000 to $144,000.

Based on a report by Bloomberg, the Model 3 will look similar to the Model S although it would be 20 percent smaller than the more expensive car. To give a more detailed comparison, Tesla Motors CEO Elon Musk said the Model 3 would have a size similar to that of the Audi A4.

The Audi A4 houses five people, including the driver, although the big difference is that the Tesla Model 3 is an electric car. The Model 3 would give passengers more leg room.

And because electric vehicles do not need an engine, the Model 3 could have a “frunk” or front trunk to accommodate additional baggage.

The report also mentioned that the company has promised a 200-mile range for the Model 3 per charge. While the affordable luxury car would not come with a signature series version, consumers may upgrade some features, such as a bigger battery, all-wheel drive, autopilot, and even a “Ludicrous Mode” where the car can reach 60mph in just 2.8 seconds.

If a consumer gets all the possible upgrades for the Model 3 sedan, the initial $35,000 price tag could easily reach $100,000 or more.

Tesla’s entire purpose for the Model 3 is to bring luxury electric vehicles to the streets and highways. Interested buyers are required to make a thousand-dollar deposit by the end of March to reserve a vehicle in the first batch of orders, which will be finished by the end of 2017.

In spite of this, Langan believes that the company will still find it difficult to expand with its current pace of income. Currently, the analyst has a “sell” rating for Tesla at $120. Stock pricing closed at $325 per share on Monday.

On the other hand, another analyst, James Albertine of Stifel, said that Tesla Motors can make it big in both the high-end and low-end portions of the luxury market. He placed a “buy” rating for the company at $325 per share.

“If you dig through the numbers, they are going to continue to grow at a significant pace at the luxury high-end, taking share there,” he also said at Closing Bell on Monday.

In a press release last month, the U.S. company stated that it aims to produce about 80,000 to 90,000 vehicles this year. In 2015, Tesla Motors managed to release roughly 50,000 vehicles to the market.

[Photo by Joe Raedle/Getty Images]

Share this article: Tesla To Offically Announce Model 3, Here’s What You Should Know
More from Inquisitr