Tesla’s Model 3 is here — and it could make or break the company

FREMONT, Calif. — For Tesla, everything is riding on the Model 3.

Tesla Model 3 cars wait for their new owners as they come off the Fremont factory’s production line.Reuters

The electric car company’s newest vehicle was delivered to its first 30 customers — all Tesla employees — Friday evening. Its $35,000 starting price — half the cost of Tesla’s previous models — and range of up to 310 miles could bring hundreds of thousands of customers into the automaker’s fold, taking it from a niche luxury brand to the mainstream. Around 500,000 people worldwide have already reserved a Model 3.

Those higher sales could finally make Tesla profitable and accelerate its plans for future products like SUVs and pickup trucks.

Or the Model 3 could dash Tesla’s dreams.

Potential customers could lose faith if Tesla doesn’t meet its aggressive production schedule, or if the cars have quality problems that strain Tesla’s small service network. The compact Model 3 may not entice a global market that’s increasingly shifting to SUVs, including all-electric SUVs from Audi and others going on sale soon. And a fully loaded Model 3 with 310 miles of range costs a hefty $59,500; the base model goes 220 miles on a charge.

Limits on the $7,500 U.S. tax credit for electric cars could also hurt demand. Once an automaker sells 200,000 electric cars in the U.S., the credit phases out. Tesla has already sold more than 126,000 vehicles since 2008, according to estimates by WardsAuto, so not everyone who buys a Model 3 will be eligible.

“There are more reasons to think that it won’t be successful than it will,” says Karl Brauer, the executive publisher for Cox Automotive, which owns Autotrader and other car buying sites.

The Model 3 has long been part of Palo Alto, California-based Tesla’s plans. In 2006 — three years after the company was founded — CEO Elon Musk said Tesla would eventually build “affordably priced family cars” after establishing…

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