It's no secret that Tesla Motors (TSLA -3.40%) is working on a more affordable fully electric car. Typically referred to as the "gen III," Tesla is betting its entire future on the vehicle's success. Even more, the market has arguably already priced in the vehicle's launch. This is why Tesla investors want to know as much as possible about Tesla's plans for the vehicle. Here are the main storyline items regarding the gen III Tesla that investors need to know.

Model S. The entry-level pricing for Tesla's Model S, at about $70,000, is double the planned price point for Tesla's gen III vehicle. Image source: Tesla Motors.

The product strategy
First and foremost, it's important to put the car in perspective with the company's broader product strategy. It's always been Tesla's plan to begin with a low-volume, high-cost car (Roadster), move on to a medium-volume, mid-cost car (Model S), and use the business growth and profits from these cars to eventually produce a high-volume, lower-cost car. This high-volume lower-cost car is the gen III.

Slide shown during Tesla's 2014 annual shareholder meeting. Image source: Tesla Motors.

Tesla says the car will be priced around $35,000 and have all-electric range in excess of 200 miles. Today, Tesla's entry-level Model S 60 kWh battery gets 208 miles of range. The 85 kWh upgrade gets 265 miles of range.

The Gigafactory and Tesla's affordable car
While demand may seem like the biggest risk for the car, I'd argue that the demand for the Model S makes a great case that demand will be robust for the lower-cost car, too. What's the biggest risk for the gen III car then? The Gigafactory.

Tesla's planned Gigafactory (a factory for producing lithium-ion batters at an unprecedented scale) and its affordable car go hand in hand. In the company's 2014 annual shareholder meeting, CEO Elon Musk explained: 

The Gigafactory is a precursor to ... the volume production of the [gen III], so we've got to make sure that the Gigafactory and the tooling and development of that gen III car move in sync to market release.

What kind of timeline can we expect for these important stars to align? Musk says "hopefully ... the late 2016 timeframe."

Thirty five thousand is more affordable than you think
Even for a new car, $35,000 might not sound all that affordable to some. But it's important to put all related costs and savings in perspective.

Musk said in the annual shareholder meeting that the savings from offset gasoline costs and relatively less expensive electricity translates a $35,000 Tesla to the equivalent of about a $28,000 car. Based on my own calculations, this is a conservative statement.

Of course, the gas savings will become even bigger if solar technology continues to become more affordable.

Model X. Image source: Tesla Motors.

Big numbers
With the help of Tesla's Model X SUV, planned for a launch in early 2015, and the gen III car, Tesla has some enormous ambitions. The company wants to grow vehicle sales from a projected 35,000 units this year to 500,000 per year by 2020 -- about three years after the gen III launch.

Given Tesla's $27 billion market capitalization, the market seems to believe Tesla can achieve these bold ambitions. But investors should keep this wildly optimistic outlook for the company in mind when they examine the stock. Given all the forward-looking assumptions price into the stock, a small blip in this plan could have huge impacts on the stock's value today. On the other hand, the more Tesla proves the success of the gen III is a sure thing, the more confidence the market will have in Tesla as a mass-market player.