Tesla Motors’ $40,000 mass market electric car set to debut in early 2015

Tesla Motors plans to unveil an electric car in early 2015 that could sell in the $40,000 range, a mainstream offering that will be key to the automaker’s future.

The car likely will go on sale in 2016 and will be crucial to the brand’s long-term survival. By moving into a higher-volume segment with a vehicle priced half as much as its other products, this latest model will truly test whether Tesla can crack into the mainstream market.

“No car company can live off 20,000-30,000 sales a year and be profitable in the long term,” Koslowski said. Tesla is on pace to build about 21,000 copies of its only current vehicle, the Model S sedan. The brand hopes to double that number in 2014, when it begins production on the Model X, a minivan/SUV mashup.

One key hurdle for Tesla in producing the new, smaller car will be finding the sweet spot of battery size, capacity and cost. To do so, it’s essential that this new car hit its $40,000 target while pulling around 200 miles of range out of a smaller battery than what’s currently in the Model S.

“That’s pretty ambitious to get there,” Koslowski said. “One hundred to 120 miles of range isn’t enough for mainstream consumers to really feel comfortable.”

This holy grail would also give Tesla a significant competitive advantage, as mainstream automakers likely wouldn’t have a car with similar range and cost for at least another year or two, Koslowski said.

Also important for Tesla’s success will be its ability to ramp up production to a much higher level than it currently operates at. The current Model S is built at Tesla’s Fremont, Calif., plant, and uses only about a quarter of the facility’s 5 million square feet of space. This is where the Model X also will be built.

The X will use essentially the same drivetrain as the current rear-wheel-drive Model S, save for another electric motor driving the front wheels, making the X all-wheel-drive.

Pricing on this I’m-not-a-minivan Model X will be about the same as the S, which starts at $71,070 before any state or federal tax incentives. Tesla is already taking refundable $5,000 deposits for the X, though it won’t say how many customers have plunked down their cash already.

“The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium,” Musk wrote in a post titled “The Secret Tesla Motors Master Plan (just between you and me).” “Then drive down-market as fast as possible to higher unit volume and lower prices with each successive model.”

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