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Tesla’s ‘III’: Leaf’s price, 200-mile range

Tesla Motors will launch a small electric sedan in late 2016 with a range of at least 200 miles and a price point “half” that of the flagship Model S, Tesla CEO Elon Musk said last week. The Model S starts at $62,400, after a $7,500 federal tax incentive, meaning the so-called “Gen III” vehicle will start at about the same price as the Nissan Leaf SV and have triple the real-world range. Speaking at the annual meeting of shareholders in Mountain View, Calif., Musk said the Gen III will have a “family resemblance” in design to the current lineup. He hinted that the car might have “some autopilot or self-driving elements” but said those features might not be ready when the car first goes on sale. “A significant improvement in technology is needed to have a compelling affordable electric car. To be compelling, it must have a useful range of 200 miles,” Musk said. Tesla is working with Panasonic on new battery-cell electrochemistry for automotive use, Musk said. He added that he is “pretty optimistic” that advances in energy storage and energy density technology can be made “without any miracles happening.” Regarding current vehicle sales, Musk said that U.S. demand for the Model S is holding steady at a rate of about 15,000 units a year. Tesla will begin shipping cars to Europe in late June and to Asia in the fourth quarter. Including those markets, demand is about 40,000 vehicles a year, he said. This year Tesla will deliver about 21,000 units During the meeting, Musk said that Tesla’s gross margins can be about 25 percent for the Model S sedan and will be about the same for the Model X crossover, a seven-seat crossover that is scheduled to be produced starting in late 2014. The less expensive Gen III will have a smaller margin but higher volume over which to divide fixed costs. Said Musk: “I would rather sell the car for less than get the highest gross margin.”


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