Tesla 2016 Sedan To Be Called Model III

Tesla Model S

Under pressure from Ford, Tesla opts for a new name for its Model E $35,000 electric, preventing its roster of cars from spelling S-E-X.

If's official: the name of Tesla's midsized sedan, tentatively set to be unveiled in 2016, is Model III.

Priced at $35,000, the all-electric Model III is meant to compete with the BMW 3 series, the Audi A3 and other entry-level luxury sedans, and it is Tesla's bid to field a so-called volume car after the niche success of the $70,000 Model S.

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Originally dubbed the Model E, the sedan's name was changed to Model 3 after Ford threatened to sue Tesla over the use of the name "Model E," Telsa CEO Elon Musk told Auto Express in an interview.

Before Ford's intervention, Tesla's roster of cars would have spelled S-E-X, including its Model X crossover SUV to be introduced next year. "I thought, this is crazy — Ford's trying to kill 'SEX,'" Musk said. "So ... the new model is going to be called Model 3." Musk said the name would be expressed "III" in Roman numerals.

Auto analysts have stressed that Tesla must introduce a mainstream vehicle if it is to grow beyond a niche brand. While the Model S, currently Hollywood's status ride du jour, is a solid success, it only sold 23,000 cars in all of 2013, a miniscule amount when compared to BMW, which sold 37,000 cars in December alone.

If Tesla could build — and sell — a car that was as successful as its much larger rivals, it could spur auto industry giants such as GM, Ford and Volkswagen, which is introducing an electric version of its popular Golf model, to invest more heavily in electrics. (BMW, for its part, invested billions to develop the electric i3 city car and i8 plug-in hybrid supercar, which went on sale in the U.S. this summer.)

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Last month, Tesla took the unusual step of making its patents available to competitors in a bid to encourage other automakers to mass-produce electric cars and help build an infrastructure of charging stations that would allow electric cars to travel long distances without the risk of stranding drivers.

The rollout of the Model 3 in volume is heavily dependent on Tesla completing its $5 billion gigafactory" that will produce the lithium-ion batteries that power its cars in sufficient numbers to ramp up production. Several southwestern states, including Texas, Arizona, Nevada and California, have lobbied heavily to secure the factory.

The Wall Street Journal reported Wednesday that California, already home to Tesla's Fremont factory, had gotten the company's renewed attention with proposed tax breaks and regulation changes that could speed construction of the factory.

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