Musk, who’s camped out at Tesla’s Fremont, California, plant for weeks to oversee assembly-line fixes for the small sedan, took to Twitter over the weekend to crow about the merits of a $78,000 all-wheel-drive Model 3 that’s on the way, joining the long-range battery version already being delivered that costs more than $50,000 with options. The company simply can’t build the cheaper version until late this year, ideally well after achieving a 5,000-unit/week rate, he said in a tweet.
“With production, 1st you need achieve target rate & then smooth out flow to achieve target cost,” Musk tweeted May 20. “Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live.”
That concession, while stating the obvious for a company that racked up back-to-back record losses in the past two quarters, is a further reminder of just how unprepared Tesla was to move from a niche maker of electric vehicles often selling for more than $100,000 each to one able to make cars priced close to the industry average for new vehicles. At best, $35,000 cars could get to customers at the end of 2018; at worst, Tesla opts not to build it.
“I’m not sure there will ever be any $35,000 cars,” said Kelly Blue Book analyst Rebecca Lindland, who canceled her own Model 3 order this year owing to numerous production delays. “I think there’s a chance the company will eventually say they’re canceling that version because there wasn’t as much customer interest, that nobody wanted it.”
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