Its name is the Model 3. Its name is the Model 3.
Tomorrow, the world should find out what Tesla Motors Inc’s (TSLA) new Model 3 looks like. We’re also going to find out how the automobile world reacts to what I call the “budget Tesla” model.
Most importantly, at least from my vantage point, is what will the reaction be in terms of Tesla stock.
We’re about to find out some of the answers to these long-awaited questions, as Thursday is the moment of truth for Elon Musk and company. That’s when the world will get a first look at the car that Musk has always promised to deliver—namely a mass-market, all-electric vehicle for the average car buyer.
In order to do that, the Model 3 must be priced in the range of the average car buyer. It must also be powered by a battery capable of ameliorating so-called “range anxiety,” i.e. the fear of running out of battery life and becoming stranded without a plug.
Eagerly Awaiting the Tesla Model 3
As far as we know right now, the Tesla Model 3 will be priced to sell, with models starting at a modest and eminently affordable $35,000. The range anxiety issue also is likely to be conquered, as reports are that the Model 3 will go at least 200 miles on a single full charge.
In my opinion, the $35,000 price tag makes the Model 3 very attractive. You can’t get too many other decent new cars at that price point, so score one for the Model 3. As for the 200-mile range, well, as a road-trip guy that’s a bit scant to me. However, for an average city or suburban commute, it’s probably more than sufficient.
Other likely features of the Tesla Model 3 include all sorts of technology, the most interesting of which will likely be the enhanced and sophisticated “autonomous driving” features.
As a “car guy,” I find this feature most distasteful. Yet as a stock guy, there is no denying that autonomous driving car technology is a trend that’s going to reshape the transportation landscape, and probably faster than anyone ever thought.
While Musk and company will make a big splash on Thursday with the Model 3 reveal event, the car won’t actually be ready for the road until sometime late next year — at least, that’s what most auto industry experts predict.
That’s not stopping Tesla from taking reservations for the new Model 3, a process that also will begin on March 31 to coincide with the unveiling of Musk’s new baby. And, all you’ll need is $1,000 to secure your spot, which is not a big commitment for a chance to own what could be an industry game changer.
Impact on TSLA Stock
As for Tesla stock, the Model 3 really is key. If the company appears like it is able to succeed in making Musk’s mass-production dreams come true, then that is going to be reflected in TSLA shares.
If the Model 3 turns out to receive a lukewarm reception, or if it fails to be delivered on time, or if it only garners modest demand — then “range anxiety” won’t just be a term related to the battery.
It will be a term related to the future of TSLA stock.
As of this writing, Jim Woods was long TSLA.