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Tesla's Affordable Car to Be Unveiled in 2015?

By Daniel Sparks - Dec 14, 2013 at 12:13PM

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The designer behind the award-winning Model S speaks up with new details on Tesla's plans for an affordable all-electric car.

The details are scant, but Tesla (TSLA -1.79%) CEO Elon Musk has not kept everything a secret. And now Tesla's automobile designer, Franz von Holzhausen has revealed some new elements to Tesla's plan for its more affordable all-electric vehicle. Most importantly, he suggests that it won't be too long before the world gets to see Tesla's highly anticipated vehicle built for the masses.

The time frame
The typical time frame Tesla mentions when it talks about the launch of its affordable all-electric car, often referred to as its "gen-III" vehicle, ranges between 2016 and 2017. In a Sept. 14 corporate presentation, Tesla put it in virtual ink in one of the company slides: the third-generation platform, producing in higher volume at a lower price, was portrayed on the company's "Unit Growth Roadmap" timetable under the 2016 to 2017 time frame.

Franz comments seem to confirm this time frame. In his interview with AutoBild, Franz said that Tesla will "probably" remove the wraps from its more affordable car at the 2015 Detroit auto show. The early unveil shouldn't be a surprise. Even though Tesla didn't start shipping the Model S until the first quarter of 2013, it showed off an early Model S body in 2011 and a production-ready version in early 2012. That said, Franz comment suggests that Tesla is on schedule with its timetable for the vehicle.

The details
Franz revealed a few other details. Confirming rumors, he told AutoBild that the car will be referred to as the Model E. Furthermore, Musk has previously said the Model E would be smaller than the Model S; but apparently it won't be much smaller. According to Franz, it's going to be about the same size.

The other details of the car Musk and company have mentioned in the past include pricing at about $30,000-$35,000 and an all-electric range at more than 200 miles. Most importantly, and why the project is followed so closely, Musk has said that when the company ships its lower-cost vehicle it wants to be producing a couple hundred thousand cars per year -- far higher than Tesla's current rate of just over 20,000 vehicles per year.

Can the Model E live up to expectations?
Up until this point, Tesla has been supply limited. In fact, Tesla has demand that exceeds supply enough that the company hasn't spent a dime on advertising for the Model S, according to Tesla's third-quarter letter to shareholders. So the company's forecast to reach a level of annualized sales for the Model S in 2014 that could exceed 40,000 definitely seems achievable -- especially as the company expands internationally. But imagining a rate of hundreds of thousands per year by 2016 is another story.

Model S.

Will Tesla's Model E live up to the hype? If history is any indication of what's to come for Tesla, the company may deliver on its promise. At the close of this year, Tesla is on pace to live up to an early 2011 prediction by CEO Elon Musk to sell 20,000 vehicles during the first 12 months of Model S deliveries. At the time, that sounded crazy. But today Tesla is on pace to surpass that goal.

As the details on the Model E began to surface and the time for its launch draws closer, Tesla's bullish predictions for the vehicle are more believable than ever. Unfortunately, however, the likely success of the Model E is already mostly priced into the stock. But as a Tesla shareholder myself, the massive opportunity is a comforting thought; for a Foolish investor who plans to hold shares over the long haul, the Model E is a representation of Tesla as an enduring, major player in the auto market -- a reason to hold for the long haul.

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