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How Much Will Tesla Motors Inc.’s Gen. III Car Change the Game?

Model S and Model X owners are paving the way
Elon Musk has said repeatedly that when a customer purchases a Model S, or when they purchase the forthcoming Model X, they are investing in a car for the masses. Tesla Motors’ (NASDAQ: TSLA ) production of its Gen. III vehicle has long been the car company’s goal, as the vehicle will directly compete with the top-selling electric cars in the U.S.

Tesla’s first full year of production has enabled the company to gain a more substantial market share in the luxury-car segment. So what happens when the Gen III is introduced at a $30,000-$35,000 price point and it can directly compete in the midrange vehicle segment?

Selling to the top 2%
The Model S competes in the luxury segment, a much smaller playground than the economy or midsize segments. Tesla had about a 17% market share of passenger vehicles with a base price of $62,400, which is the lowest Model S price (after factoring in the federal tax credit). Seventeen percent of the top 2% of the U.S. luxury passenger car segment isn’t too bad for its first full year in volume production.
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