Rolling Out Cheaper Teslas Right Now Could Be Fatal, Warns Musk

Elon Musk may not worry about running out of gas, but money is another matter. In response to a question on Twitter over the weekend, he warned that giving the hoi polloi the $35,000 base-price Model 3 it covets before the end of the year (at the earliest) could cause Tesla to “to lose money & die.” Instead, it will shortly be producing a $78,000 version of the vehicle that will have a top speed of 155 miles per hour, and a range of 310 miles.

“Is Tesla Abandoning the Mass Market?” reads the head on a Wall Street Journal “Heard on the Street” column. “Prospective customers should be angry, and investors ought to be wary,” writes Charley Grant.



“Tesla has struggled to produce a $50,000 version of the Model 3, and as the company burns through cash, the question is how many of those will be available once the faster $78,000 offering is ready. If Model 3 is suddenly a high-end car, then Tesla, whose other offerings start around that price, would be more comparable to Maserati than to Chevy, which is producing a $36,620 electric car,” Grant continues.

“Toni Sacconaghi, an analyst at Sanford C. Bernstein & Company, said it was not unusual for companies to produce higher-priced, more profitable models when they start making a new vehicle. But Tesla risks frustrating its customers if the most affordable version isn’t available soon, he said,” writes Neal E. Boudette for TheNew York Times.

The Model 3 “was dubbed the first mass-market car, and a year after launch, we’re getting more higher-priced versions and the $35,000 model isn’t out,” Sacconaghi tells Boudette.

There was additional bad news for the automaker yesterday.

“While ‘there’s plenty to like’ about Tesla Inc.’s Model 3, issues with the mass-market sedan's braking, touch-screen controls, and ride quality ‘hurt’ the car's standings with Consumer a result, the Model 3 did not earn a Consumer Reports recommendation, the magazine said on its website,” writes MarketWatch’s Claudia Assis. 

“I’ve been testing cars for 11 years,” Car and Driver Testing Director K.C. Colwell said in an interview for the Consumer Reports story, “and in 11 years, no car has stood out with inconsistent braking like this. Some trucks have… It was just weird.” 

But the Consumers Union testers “found the Model 3 thrilling to drive,” CR’s Patrick Olsen reports, with superior handling and a “blistering 0-to-60-mph time of 5.3 seconds.”

Indeed, “despite these growing pains, its Model 3 is now the best-selling electric car in the U.S.." writes CNBC’s Lora Kolodny. "More than 450,000 people have already reserved that vehicle, paying $1,000 refundable fees to do so. Although Tesla failed to hit its goal of making 2,500 Model 3s per week by the end of March, a leaked email in May suggests the company is closing in on a 3,500 weekly production rate."

“The bear case for electric-car maker Tesla Inc. has looked smart lately, with shares down almost 10% from May 9 to Friday. But a report on Monday from Berenberg spells out a more bullish take,” writesBloomberg’s Dana Hull. “Berenberg analyst Alexander Haissl raised his price target to $500 from $470 in anticipation of better-than-expected Model 3 gross margins. Haissl said that ‘consensus has largely dismissed the prospect of a 25% gross margin on the Model 3’ due to production delays and quality issues, but it’s ‘almost totally flawed’ to assume Model 3 margins based on the Model S sedan and Model X sport utility vehicle..." 

The Mercury New’s Ethan Baron also cites Haissl’s research, then writes: “In related news, the Palo Alto electric car maker...on Sunday posted a video on Twitter that purports to show how difficult it is for a Model X to roll over. The 14-second clip shows a Model X being pushed forcefully sideways during a crash test — it hits a sand-filled platform, tips onto its side, then falls back onto its wheels."

Take a look at the video. The way it keeps bouncing back, one wonders if there’s a self-referential metaphor embedded in the imagery.

Next story loading loading..