The Model 3 was Teslas first low priced entry level model that management badly

# The model 3 was teslas first low priced entry level

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3 was Tesla’s first low-priced, entry-level model that management badly wanted to market at a base price of $35,000. The problem was that the lithium-ion battery pack was the single biggest cost component in the Model S and Model X—a cost reputedly in the neighborhood of$25,000 as of 2014. Hence, whether Tesla could profitably introduce the Model 3 at a base price of $35,000 hinged on how fast and how far the company could drive down the costs of a bat-tery pack for Model 3 via greater scale economies in battery production and cost-saving advances in bat-tery technology—just equipping the Model 3 with less powerful electric motors would not, by itself, be sufficient.Tesla’s First Vehicle—the Tesla RoadsterFollowing Tesla’s initial funding in 2004, Musk took an active role within the company. Although he was not involved in day-to-day business operations, he nonetheless exerted strong influence in the design of the Tesla Roadster, a two-seat convertible that could accelerate from 0 to 60 miles per hour in as little as 3.7 seconds, had a maximum speed of about 120 miles per hour, could travel about 245 miles on a single charge, and had a base price of$109,000. Musk insisted from the beginning that the Roadster have a lightweight, high-strength carbon fiber body, and he influenced the design of components of the Roadster ranging from the power electronics mod-ule to the headlamps and other styling features.22Prototypes of the Roadster were introduced to the public in July 2006. The first “Signature One Hun-dred” set of fully equipped Roadsters sold out in less than three weeks; the second hundred sold out by October 2007. General production began in March 2008.New models of the Roadster were introduced in July 2009 (including the Roadster Sport with a base price of $128,500) and in July 2010. Sales of Roadster models to countries in Europe and Asia began in 2010. From 2008 through 2012, Tesla sold more than 2,450 Roadsters in 31 countries.23Sales of Roadster models ended in December 2012 so that the company could concentrate exclusively on producing and marketing the Model S. However, Tesla announced that in early 2015 Roadster owners would be able to obtain a Roadster 3.0 package that enabled a 40–50 percent improvement in driving range to as much as 400 miles on a single charge; in 2014 and$1.6 billion in capital expenditures in 2015. Management expected that $618 million of previously issued convertible debt due in 2018 would likely be converted into shares of common stock in 2016.Tesla ended 2015 with$1.2 billion in cash and cash equivalents. Executive management expected that the company’s current level of liquidity, cou-pled with projected future cash flows from operating activities, was likely to provide adequate liquidity in 2016 based on current plans. However, if market conditions proved favorable, management said it would evaluate the merits of opportunistically pur-suing actions to further boost the company’s cash balances and overall liquidity. Top management expected that the company’s capital expenditures in 2016 would total about \$1.5 billion to further expand

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• Fall '09
• Tesla Motors, Tesla Roadster, Electric car