Is there any stopping Tesla after its Model 3 launch?

Tesla Model 3 orders have passed the 276,000 mark within a couple of days of the new model being launched. So is the car heralded as a game-changer going to turn the automotive world on its head?

The short answer is 'yes... probably' - but that's a very short answer and is dependent on a number of not inconsiderable obstacles. Tesla has set itself up in the best possible fashion though with those wanting to buy a Model 3 needing to put down a $1,000 deposit to register their interest.

With considerably more than a quarter of a million buyers giving the company $1,000 from the outset - and that figure is certain to be fairly out of date by now - the electric vehicle manufacturer has raised well in excess of a quarter of a billion dollars in funding, more than a year before the car is due to go into production.

The biggest problem that Tesla is facing now though is that it is playing with the automotive big boys. Many will point out that the Model S and new Model X are already doing that, and they are to a degree. However, there simply aren't enough of those models able to be produced by Tesla to really trouble the major players.

That's not to say that Tesla hasn't shaken up the market. It has and rivals are having to respond to Tesla's entrance, but the BMW Group alone made more than 2.25 million cars - just in 2015. The most up to date figures show Tesla has made 107,000 cars ever.

Tesla's Gigafactory is planned to have a production capacity of "500,000 cars per year towards the latter half of this decade", and it is with this in mind that Musk also wrote on Twitter after the Model 3's launch "Definitely going to need to rethink production planning". Here we come to the first great obstacle. Can Tesla keep up with demand?

Last year the company delivered just over 50,000 cars, or 10 per cent of its planned production capacity. There are already sizeable waiting lists for the Model S saloon, with the Model X SUV also seeing customers made to wait for their car - and the latter model hasn't even made it to anywhere near all of its markets yet.

Granted, there is considerable room for expansion, but the company plans for growth in 2016 with the aim of 80-90,000 vehicles (Model S and Model X combined) manufactured. Once Model 3 production comes on-line it is expected that Tesla's capacity will be reached very quickly, which is great news for the company but requires patience from customers.

Once it gets to half a million cars a year, Tesla will start taking sizeable sales from the traditional executive rivals, especially if it can keep progressing with battery technology. That rivals are concerned about this can be seen in the fact that Audi, Porsche and Aston Martin have all confirmed long-range EV models, while BMW, Mercedes and Jaguar are all expected to produce competing EV models within the next couple of years.

So on top of production concerns, Tesla now has to start worrying about being hunted, when before it was the hunter. Not only are there premium models to contend with but, now that it has launched a cheaper and more accessible car, volume manufacturers will have Tesla in their sights too. Chevrolet's Bolt will be available before the Model 3 for example, and at a slightly lower price point but with a similar driving range.

Nissan is expected to bring out a new Leaf within that time too, also with a 200 mile range, while BMW's i3 has long been rumoured to get a significant battery upgrade in the near future too - possibly with a new, larger BMW i model set to share its electric powertrain.

And that's ignoring the conventionally fuelled and plug-in hybrid models from rivals such as the Jaguar XE, Audi's A4, BMW's 3 Series, and the Mercedes C-Class. BMW, Mercedes and Volvo have all started electrifying their conventional fleets, with EVs promised in the next few years.

The interesting thing to see from the Model 3 launch is that Tesla is trying to keep things simple, which will save the company from fighting on too many fronts to begin with. The model line-up for example sees the Model 3 available with a starting range of around 200 miles. If it started with much more, Tesla would be cannibalising sales from the Model S.

Likewise, the Model 3 doesn't look like a saloon but has the appearance of a hatchback, sitting halfway between the separate saloon and estate models that many of its rivals produce. Keeping the Model 3 to one body style reduces engineering and manufacturing costs, and keeps the look in line with both the Model S and Model X.

Tesla has chosen to rely on the huge interior space freed up by not having to worry about a bulky engine to offer a model similar to a hatchback too, with far more space available than a saloon, but not quite providing the huge, single area load capacity of an estate.

Tesla Model 3 details

It is the interior that is the most simple element though, with one large screen, a steering wheel and very little else. It hints at an expectation that autonomous driving regulations will be more clearly laid out within the next year or so. The minimalist features imply that Tesla doesn't expect the driver to have to to much driving, supported by the fact the company's Autopilot software is to be fitted as standard and is already constantly being evolved.

So Tesla has plenty to worry about, but these problems are largely a sign that it is progressing well. To make the step from niche to mainstream manufacturer is a very difficult one, but Tesla is currently nicely set up. Crucially the product on offer is expected to be very strong, just like the Model S and reports of the Model X, and that element hasn't been questioned at all.

Interest from customers is certainly not lacking either, and Tesla will have plenty of rivals keeping a close eye on things - but it is sure to prefer that state of affairs rather than have manufacturers ignore the company's development completely as not being worth the attention.

Looking back at that original question, the Model 3 could well prove to be the car of a generation that everyone remembers, even those who have no interest in cars. It isn't likely to revolutionise the market by itself but it already looks to be a catalyst for change, something the Nissan Leaf did around five years ago. The threat of the Model 3 has coincided with Chevrolet and Nissan working on longer-range EVs and is sure to have spurred those companies on.

Importantly Tesla has set-up the Model 3 on solid foundations, with two crucial elements at the core to its probable success. Firstly, the Model 3 looks set to be in a niche of its own as an affordable but upmarket long-range EV. Secondly, Tesla already has a brand that is the envy of many others, seen as a tech leader and cool manufacturer in the same vein as Apple is in the computer world. It's products are very good, but they also have a desirability about them.

So the Model 3 will help usher in a new generation of electric cars, and has already pushed established car manufacturers to create their own rival products. It must make sure production is as streamlined as possible - and another factory wouldn't be a bad idea to help production figures - while the regular developments seen on the Model S will be essential to keep the Model 3 at the front of its field.

Strangely, one of the most important aspects in determining the Model 3's success - and Tesla's resulting place amongst the world's major car manufacturers - is not the car itself but the charging infrastructure. Tesla has already got an excellent Supercharger network set-up and has committed to expanding it further.

With the Model 3 set to appeal to a number of car buyers who would previously have never considered an EV, the unique position as both car maker and fuel provider is sure to tip the scales and persuade some customers to take the plunge into plug-in car ownership.

There is still a long way to go before EVs become completely mainstream, but Tesla is helping get the industry to that point. While the Model 3 won't prove the tipping point in itself, it is a huge and important step towards that stage.

In short, we will have to wait and see what impact the Model 3 has both on Tesla and the automotive industry as a whole. Indications are good though - it just remains for Tesla to fulfil its potential.

Tesla driving forward value for money

We've done some analysis based on predicted sales figures which show that the Model 3 will prove to be one of the best value cars on the road. Take a look at the statistics below.

Model Official
range (miles)
Real world
range (miles)
OTR price
(incl. PiCG)
Official range
Renault Zoe 149 103 £18,945 £127
Citroen C-Zero 93 74 £12,495 £134
Peugeot iOn 93 74 £12,495 £134
Nissan Leaf 30kWh 155 124 £24,990 £161
Tesla Model 3 215* 172* £35,000** £163**
Nissan Leaf 24kWh 124 99 £21,290 £172
Tesla Model S 70 275 220 £49,535 £180
Tesla Model S 90 D 340 272 £65,235 £192
Kia Soul EV 132 106 £25,495 £193
Nissan e-NV200 Combi 106 85 £23,359 £220
VW e-up! 93 74 £20,570 £221
Mercedes Benz B 250 e 124 99 £27,775 £224
BMW i3 118 94 £26,480 £224
Renault Kangoo Maxi Z.E. 106 85 £24,259 £229
VW e-Golf 118 94 £27,150 £230
Mitsubishi i-MiEV 93 74 £24,054 £259
Tesla Model S P90 D 319 252 £82,735 £259
Ford Focus Electric 100 80 £26,645 £266

Notes: Figures based on OTR of base models and official EV range from NEDC test cycle. *Model 3 data forecast based on Tesla announcements. **Future OTR of Model 3 forecast as £35,000 (2016 prices). Should the Model 3 start at less than the £35,000 as post-PiCG figure used (as is expected), the Tesla will only prove better value than its position in the table suggests.

Click here for more information on NGC's cost per range analysis »

Chris Lilly

Author:Chris Lilly
Date Updated:5th Apr 2016

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