Tesla Model 3 – Photo credit: Tesla Motors

At locations around the world, would-be owners of the latest model from Tesla Motors, the Tesla Model 3, camped overnight and stood in lines that snaked around buildings – all for the opportunity to plunk down a $1,000 deposit for the affordable, $35,000 luxury electric sedan that won’t be out until late 2017.

That’s at the earliest, according to some analysts who opine that previous Tesla product launch delays may be a predictor of what could happen with the Tesla Model 3. Some, including Morgan Stanley’s Adam Jonas, say the launch might not be until sometime in 2018.

Tesla Model 3 – Photo credit: Tesla Motors

Much-Anticipated Reveal

Elon Musk, Tesla Motors CEO, unveiled the Tesla 3 – actually a prototype – at the company’s design facility in Hawthorne, California on Thursday, March 31. Before the reveal, Musk said that more than 130,000 people had already pre-ordered the vehicle. Within a half hour of the unveiling, that number of pre-orders reached 137,600.

News reports of hundreds of consumers eagerly awaiting the time they could reserve their Tesla Model 3 said that it didn’t matter whether it was Houston, Texas or Vancouver, British Columbia or Sydney, Australia or elsewhere worldwide. The scene was the same. All those in line were there to give their $1,000 deposit which reserves their spot for a Tesla Model 3. The deposits are refundable.

Tesla Model 3 – Photo credit: Tesla Motors

During the unveiling in Hawthorne, Musk pointed out that the Model 3 would go from 0-60 mph in under 6 seconds, although some trims might even be faster. He also said the Model 3 would get at least 215 miles on a single charge. The five-seat luxury electric sedan would also have all the necessary sensors and hardware to drive itself.

Competition for the Tesla Model 3

With the availability of a production Model 3 a while off, Tesla faces competition from a number of other manufacturers coming out with new electric models of their own.

2017 Chevrolet Bolt EV – Photo credit: Chevrolet

These include the 2017 Chevrolet Bolt which is set to arrive at the end of 2015. The Bolt will have a similar $35,000 price tag and deliver a similar 200-mile range on electricity.

2017 Hyundai Ioniq – Photo credit: Hyundai

Another competitor is the 2017 Hyundai Ioniq, shown at the 2016 New York Auto Show. The Ioniq, available as an all-electric, a hybrid and plug-in hybrid, goes on sale this fall, with a 110-mile electric range and possibly the same $35,000 starting price. Hyundai says it will be priced competitively with the Toyota Prius and Nissan Leaf.

Audi Q6 Electric SUV teaser – Photo credit: Audi

Audi will bring out an A6 electric SUV in 2018 or 2019. Audi had confirmed the production of the electric A6 SUV at its annual meeting in early 2015. Later, Audi officials said the Q6 electric SUV would have a range of more than 310 miles. That figure, however, is likely based on European tests. A more reasonable rating for U.S. Audi A6 electric SUVs is in the range of 240 miles.

According to various news reports, Musk isn’t worried about the competition. He said that the Model 3 will compete most directly with small luxury cars, like the Audi A4 and the BMW 3-Series.

Federal Tax Credit May Diminish or Disappear

A point worth making – although fans of Tesla probably aren’t going to be deterred by it – is that the federal tax credit of $7,500 may diminish or disappear altogether by the time the Model 3 is in full production. That’s because the government phases out the credit for any manufacturer with a cumulative total of 200,000 electric and plug-in hybrid sales in the U.S.

Considering the fact that Tesla sold more than 80,000 Model S electric sedans in three years and the Model X is now in production, Tesla sales should near 140,000 in 2016 and exceed 200,000 in 2017.

Here’s how the federal tax credit gets phased out:

  • In the second quarter after sales go over the 200,000 mark, the federal tax credit dips to $3,750 per vehicle.
  • Two quarters later, the federal tax credit drops to $1,875 per vehicle sold.
  • Six months after that, the credit is zero.

Tesla Model 3 – Photo credit: Tesla Motors

What Contributes to the Tesla Frenzy?

Logic, apparently, has nothing to do with what people feel – not when it comes to something like fan fever or frenzy over a much-anticipated new model. Tesla’s appeal has long been that of the electric car start-up company’s challenge to the status quo, and very much Musk’s stated desire to bring electric vehicles to the masses.

Technically, the Model 3 isn’t the third model in the Tesla lineup. First there was the Tesla Roadster, the first fully electric sports car. The Roadster, however, is no longer in production. The second Tesla to be built was the Model S, a fully electric luxury sedan, followed by the just-introduced Model X, a luxury electric crossover.  Thus, the Model 3 is actually the fourth Tesla model, not the third. But the choice of the Model 3 name works just fine, despite the technical inaccuracy.

Tesla Model 3 – Photo credit: Tesla Motors

Gauging by the lines of thousands of people waiting hours on end to become part of the Tesla wave of would-be owners, the frenzy shows no signs of abating. People who don’t mind waiting up to two years for a Model 3 are a part of Tesla history. There is a certain appeal in that, as well.

There is also no doubt that the emergence of Tesla has brought a great deal of excitement to the automotive world. Before the appearance of the Tesla Roadster, electric cars were far from sexy – unless they were in concept form. That an electric car could be sexy, environmentally friendly and commercially available started a trend that will continue for some time to come.

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