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Tesla Motors (NASDAQ:TSLA) Wasn’t Supposed to be a Club For The Rich

Tesla Motors Inc (TSLA) Autopilot

Tesla Motors Inc might have built itself as a luxury premium brand with its Model S and Model X, but the firm says it is not interested in becoming a carmaker for the “elite” who can afford to drop 100+ grand on a car. Tesla’s co-founder and chief technology officer, JB Straubel says the firm is devoting its energy and resources to building the mass market Model 3, which the firm plans to unveil by 2017. The Model 3 has been hinted as Tesla’s ace to trigger the widespread adoption of EVs.

Tesla Motors Inc (TSLA) Model X SUV

Tesla makes great EVs – at least the reviews of its Model S and Model X shows that the firm has gone above and beyond in making the cars beat rivals in the same price range. For instance, Tesla’s Model S recently set new records on the Consumer’s rating test and CEO Elon Musk has admitted that he got carried away in building the Model X with many of its awesome features such as the panoramic windscreen, gull-wing doors, and bioweapon defense mode.

Tesla wants to build a car for everybody

CTO JB Straubel made a presentation at the University of Nevada, Reno in which he confirmed Tesla’s plan to make EVs that everybody can afford. In his words, “Tesla was not founded to make expensive cars. To make luxury or high performance cars. This is a misconception that comes up all of the time”. Of a truth, most of the people who drive Tesla’s are in the upper strata of the society and Tesla has come to be a status symbol without any ostentation.

Straubel goes on to say, “And it’s perhaps understandable based on the cars we’ve built today. But it is not our mission. Our mission is to make cars that everyone can afford,” The Model S starts at about $69,000 but everyone knows that the commonest 85D will set you back at least $85,000 before custom features. No one outside of Tesla know what the base Model X will cost but the market seems to agree that a $120,000 price point is within reason.

However, the CTO notes that Tesla Motors is serious about getting that mass market Model 3 with the $35,000 price point out in the next two years. He says, “Most of the people inside of Tesla are no longer working on the [Model] S and the [Model] X but they’re hard at work to go into the Model 3. And this car is aiming at a $35,000 price point with more than 200 miles of real world range…[Tesla is aiming] at building hundreds of thousands per year instead of tens of thousands.”

Rich folks are subsidizing Tesla for the mass market

Tesla Motors might have the intent of changing autos by making EVs mainstream but its acts so far has made EVs exclusive. To start with, you can only but the Model S and Model X by direct orders – direct orders that require financial commitments. You’ll drop $5,000 to reserve a Model X and the signature edition requires a $40,000 deposit. However, it seems that Tesla still wants to make EVs mainstream – but as it happens with every new tech, the rich folks just have to pay for the R&D by paying a premium before the rest of the market starts to come on board.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.