Tesla Model 3 Unveiled

Tesla Model 3 - H 2016
Michael Walker

The mass-market electric sedan will have range starting at 215 miles and cost $35,000. "You will not be able to buy a better car," said Tesla CEO Elon Musk.

In an event that recalled the frenzy of the late Steve Jobs introducing the iPhone, Tesla Motors CEO Elon Musk took the wraps off the Model 3 in a lavish spectacle at the company's Hawthorne, Calif. design center Thursday evening.

"We don't have it for you tonight — April fool, just kidding," Musk quipped as a brace of Model 3s was revealed in classic auto-show bombast  "Do you like the car?" Musk asked as the crowd, a mixture of Tesla owners and journalists from around the word, roared in approval.

Musk said that the Model 3 will have a range of 215 miles on a single charge and go from zero to 60 in less than four seconds. "These are minimum numbers," Musk said. "We hope to exceed them."

Musk confirmed that the Model 3 will sell for $35,000 before federal and state incentives and include the Tesla's Autopilot hardware, which enables semi-autonomous driving.

The Model 3 is seen as essential to Tesla's bid to become a mainstream automaker — Musk has pledged to sell 500,000 cars annually by 2020 — and as a potentially seminal car that could transform electric vehicles from a niche market for the wealthy into affordable commodities. 

Tesla's Model S, introduced in 2012 and currently the best-selling large luxury sedan in the United States and a familiar sight at Hollywood studio parking lots, and the Model X, an SUV that went on sale last fall, both start at around $80,000 and top out well over $100,000 when typical options like sunroofs are added.

The revenue generated by the Model S made possible the development of the Model 3, Musk said. Addressing the Model S owners in the audience, he added, "Thank you for helping pay for the Model 3."

The secrecy that had surrounded the Model 3's development fueled intense speculation about Tesla's first foray into a car aimed at the masses. (The Model 3's creation myths include Musk's assertion that the car was originally to be called the Model E, so that the names of Tesla's first three cars would spell S-E-X, but "3" was subbed when it was discovered that killjoys at Ford had already trademarked the name.)

The Models S and X have had the marketplace for long-range electric cars to themselves, but competing models from BMW, Audi, Mercedes-Benz, Porsche, Aston-Martin and others are expected to arrive in the next three to five years.

The Model 3 will have to contend with GM's Bolt, a $30,000 electric car with 200 miles of range that is expected to enter production later this year and is considered a bellwether for the viability of mass-produced electric vehicles in what could be a protracted period of cheap gasoline. Even if Model 3 enters production by the end of 2017, as Musk reaffirmed at Thursday's event and which some analysts say is unrealistic given the lengthy delays that plagued the Model X, the Bolt could have a year's head-start on the Model 3.

Tesla began taking orders online for the Model 3 at the start of Musk's presentation on Thursday. Earlier, potential customers mobbed Tesla stores to put down $1,000 deposits for the car, sight unseen, after Tesla announced that orders placed at the stores would be given priority in the delivery queue.

Musk made an impromptu appearance at the Century City Tesla store in L.A. on Thursday and posted on Twitter that he was "incredibly inspired" by the interest in the Model 3 and promised a "small token of appreciation" for those who waited in line. It was another public relations masterstroke for Tesla, which doesn't advertise and mostly relies on Musk's cryptic Twitter posts to generate media coverage, as images of long lines spilling onto sidewalks in front of Tesla stores appeared around the world.

Just before he left the stage Thursday evening, Musk announced that Tesla had received 115,000 orders for the Model 3 in last 24 hours. Half an hour later, the orders stood at 130,700 and climbing.