Tesla targets broader audience with electric sedan
HAWTHORNE, California (Reuters) - Electric car start-up Tesla Motors Inc unveiled its newest, lowest-cost vehicle on Thursday, a family sedan the company says will be the first highway-ready electric vehicle accessible to most car buyers.
Tesla's Model S four-door sedan will cost $49,900, after a U.S. government tax credit for electric vehicles of $7,500, Tesla Chief Executive Elon Musk said at the car's unveiling near Los Angeles. It is slated to go into production in the third quarter of 2011 and will be manufactured in Southern California.
Musk, who became a billionaire founding PayPal before founding Tesla, is billing the Model S as the first highway-ready electric vehicle that will be affordable to a wide audience.
"The $49,000 actually is accessible to most of America," Musk said in an interview following the event, adding that "you do have to make an assumption about gasoline prices."
The price of the Model S, Musk said, is comparable to that of a $35,000 gasoline-powered car such as a top version of the 2010 Ford Taurus, after factoring in the cost of refueling, assuming gas prices of about $4 a gallon.
"Would you rather have this car, or would you rather have a Ford Taurus?" Musk asked the crowd at the unveiling.
Still, Tesla plans to produce just 20,000 of the cars annually, a figure Musk acknowledged was "still small for the global car market."
Tesla's announcement comes as carmakers around the globe are rushing to roll out affordable all-electric vehicles in response to stepped-up consumer concerns about volatile gasoline prices and vehicles' production of climate warming greenhouse gases.
General Motors, for instance, has staked its reputation on bringing the plug-in electric Chevrolet Volt to market late next year, though it will initially produce just 10,000 Volts annually.
"AS AFFORDABLE AS POSSIBLE"
San Carlos, California-based Tesla already sells the Roadster electric sports car, but that vehicle's $109,000 base price has limited its accessibility to the very wealthy, including Hollywood celebrities and corporate titans like actor and California Gov. Arnold Schwarzenegger and Google Inc co-founders Sergey Brin and Larry Page.
With the Model S, Tesla is aiming for a broader range of customers than with the Roadster, Musk said, saying the company was making the car "as affordable as possible." He expects the car to appeal to buyers of mid-range to premium sedans.
Tesla plans to achieve the 20,000 car annual rate about a year after going into production. The company expects to receive funding from the Department of Energy this year to support the Model S program.
The Model S is similar in size to other sedans, yet it boasts a very sloped roof to make it more aerodynamic and ensure its all-electric range.
The car's base price will include a battery with a 160-mile (257 kilometer) range, Musk said. Customers will have the option to upgrade to batteries with either a 230-mile range or a 300-mile range. Each upgrade will cost between $8,000 and $10,000, Musk said, though the company is considering a program that would allow customers to rent the longer-range packs for long trips.
The Model S will also be available to lease.
The car can seat five adults, plus two children in a rear-facing seat at the rear of the car. Without that many passengers, Musk said the car can also comfortably carry a surfboard or a 50-inch television.
The car has a top speed of 130 mph and can get from zero to 60 mph in 5.5 to 6 seconds.
Tesla, which ran into a series of cost overruns and production delays with the Roadster that forced it to cut 24 percent of its staff, said it should be profitable by the third quarter of this year, excluding Model S costs.
So far, Tesla has delivered nearly 300 Roadsters and has about 1,000 people on the car's waiting list. Customers will be able to start placing orders for the Model S immediately, and Musk said they should have no fears about whether the car will in fact make it to market.
"This car will be manufactured, it will come to market. They should have zero doubt about that," Musk said.
(Editing by Gary Hill, Phil Berlowitz)