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Tesla Motors’ progress simply electric

There are many ways to measure Tesla Motors Inc.’s remarkable progress in the three years since the electric-carmaker released its initial public offering. There’s the first-ever profitable quarter this spring. There’s the nearly perfect 99 out of 100 score in Consumer Reports’ review of the Model S sedan. There’s the stock price, up more than 500 percent since June 2010 and currently trading around $109 a share.

Then there’s this: Tesla, which is on track to build 21,000 cars in its Fremont, Calif., factory this year, is worth more than Fiat and nearly a quarter as much as General Motors — which has 21,000 dealers.

In a considerable understatement, Tesla CEO Elon Musk told shareholders this month: “This has been a great year. Things have really gone pretty well. I’m having a lot more fun these days.”

But while Tesla has proved it can make an expensive electric car, it has not yet met its goal of making an affordable one, and its long-term success may hinge on its ability to drive down battery and manufacturing costs and create a car in the $35,000 price range.

“The biggest single challenge for electric vehicles is affordability,” Musk acknowledged at the shareholders meeting. “If we could build the Model S for half the price that it currently costs, and solve the long-distance travel problem, then we’d see widespread adoption. That’s what’s needed for there to be a huge tipping point for electric cars. We’re trying to advance that as fast as we can. I’m hopeful that we’ll be there in three to four years.”

Tesla says it plans to roll out what it calls the “Gen 3,” a smaller version of the $72,000 Model S at about half the price, in 2016 or 2017. Before then, sometime next year, it plans to start delivering the Model X, a crossover between an SUV and a minivan.

Prices for the Model X have not been announced, but Tesla hopes to deliver the Gen 3 at a much lower cost than the Model S because it will spend much less on research and development. It also expects battery technology to improve, allowing it to use smaller, less expensive batteries than those that power the Model S. Also, as it produces cars in higher volumes, Tesla should be able to negotiate cheaper part prices from suppliers.
More3 tribunelive.com

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