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Tesla Model 3 joins ranks of affordable electric vehicles

Tesla Motors, with its reputation for making sexy, sporty and very expensive electric cars, is staking its future on something more affordable: The Model 3 was unveiled Thursday near Los Angeles.

GM's Chevy Bolt will be on the street at least a year before the Model 3

Tesla Motors, maker of sporty and expensive electric cars, is hoping its new Model 3, which was unveiled near Los Angeles Thursday night, will propel it from niche player to mass-market automaker.

With a range of over 300 kilometres and a price tag that CEO Elon Musk says will start at $35,000 US — before government incentives — the Model 3 is less than half the cost of Tesla's previous models and has a longer range than its EV rivals the Nissan Leaf and BMW i3.

Tesla Motors unveils the new lower-priced Model 3 sedan at the Tesla Motors design studio Thursday in Hawthorne, Calif. It doesn't go on sale until late 2017, but in the first 24 hours that order banks were open, Tesla said it had more than 115,000 reservations. (Justin Prichard/AP)

Right now, Tesla sells 2 high-end vehicles.

The "falcon-winged" Model X — an all-electric SUV — came out in September 2015, right around the time Tesla CEO Elon Musk broke the news that owners of the Model S, which was introduced in 2012, could let their cars do some of the driving for them thanks to a new firmware upgrade.

The starting price for a Model X, which Canadians can reserve online with a $5,000 deposit, is yet to be publicly announced, but a straight conversion from its American price tag puts it in the neighbourhood of $121,000 Cdn. A Model S begins at $95,300 Cdn.

(Marcio Jose Sanchez/AP)
(Kai Pfaffenbach/Reuters)

Tesla faces some stiff competition.

Electric cars only account for about one per cent of new car purchases in the U.S., but the Tesla Model 3 is a critical part of the money-losing automaker's plan to increase sales from around 85,000 cars this year to 500,000 by 2020.

There are, however, some big hurdles to clear in Tesla's path. Wired magazine, which has kept a close eye on the rise of Tesla and had the only photo of the new car pre-launch, mentions American drivers' "range anxiety" and low gas prices as the main reasons buyers remain skeptical of electric vehicles.

Competing for that relatively slim slice of the pie are auto giants like BMW, Audi, Hyundai, Nissan, Volkswagen and General Motors, which beat Tesla to the punch when it came to launching its electric car for the masses. That's U.S. President Barack Obama figuratively kicking the tires of the Chevrolet Bolt at the Detroit auto show in January. 

(Jonathan Ernst/Reuters)

The Bolt is set to hit showroom floors by year's end, while Musk says buyers can expect to drive a Model 3 off the lot by the end of 2017. Auto analysts are doubtful Tesla can deliver, though, and put roll-out closer to the end of 2018. The Bolt, which does not have a Canadian list price yet, starts around $30,000 US and has the same 300-kilometre range as the Model 3.

There is no federal incentive for EV car buyers in Canada, but both the Tesla Model S and the Model X qualify for $3,000 cash-back in Ontario. The Model 3 is expected to qualify for up to $14,000 in Ontario, because it seats five and has a manufacturer's suggested retail price of less than $75,000. The Bolt is too new to be on Ontario's list of eligible EVs, but Chevy's Volt and Spark vehicles qualify for as much as a $12,700 incentive. B.C. and Quebec also have similar clean energy vehicle incentives.   

Take a look at Tesla's competition:

Hyundai, from South Korea, is launching its Ioniq line which includes all-electric, hybrid and plug-in hybrid models. The EV Ioniq has a claimed 180-kilometre range and is expected to rival Tesla's Model 3 on price. This is the hybrid version on display at the New York Auto Show on March 23.

The Nissan Leaf, which the Japanese car company unveiled in Tokyo in 2009 and launched a year later, was billed as the world's "first affordable zero-emissions car." A new Leaf starts at $32,698 for the S model while a sportier SL model starts at $40,500.

(Bryan Thomas/Getty)
(Franck Robichon/EPA)

BMW is Tesla's closest rival.

BMW, which claims the title of world's largest luxury carmaker, was relatively quick to follow Tesla into the luxury electric market with the i8 sports car, which it followed up in 2013 with a more affordable five-door crossover, the i3.

(Andy Wong/AP)
(Mike Segar/Reuters)

Audi and Porsche join the luxury EV market.

Not to be left in Tesla's dust, Audi rolled out its latest e-tron Q6, the first all-electric SUV from the German automaker, at the Frankfurt Auto Show this year. 

Porsche also pulled back the veil on its first electric-powered model, the Mission E, in September last year. 

Odd Andersen/AFP/Getty)
(Odd Andersen/AFP/Getty)

And don't forget about Google. 

The search giant's fully autonomous car, which is still limited to a fleet of about 48 test units kept in its California skunk works, may have hit a bus in February, but work continues to bring self-driving capabilities to more vehicles.

(Elijah Nouvelage/Reuters)


An earlier version of this story said incorrectly that the Tesla Model S starts at $101,900 Cdn. In fact, it starts at $95,300 Cdn.

With files from Reuters and The Associated Press


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