Why Tesla's $35,000 Model 3 May Not Be A Big Hit

Last night, Tesla (NASDAQ: TSLA) confirmed via Twitter (NYSE: TWTR) a story published in Auto Express saying that its Gen III model will be available in 2017 and only cost around $35,000.

Confirmed: Our Gen III car, due out after Model X, will be named Model 3. http://t.co/PLhUzycSlp pic.twitter.com/noZf17LXre

— Tesla Motors (@TeslaMotors) July 16, 2014

FYI, the Model 3 images used by @AutoExpress were mock-ups based on their own speculation.

— Tesla Motors (@TeslaMotors) July 16, 2014

That means that Tesla's newest vehicle, the Model 3, will sell for about half as much as the Model S and the Model X. While that puts it at a much more approachable price range for the average consumer, that doesn't necessarily mean you'll be seeing a surge of Teslas on the road. Senior Kelley Blue Book analyst Karl Brauer said that while the pricing of Tesla's next sedan is an interesting component, but the real question is how far it will go on a single charge. The electric car market already has a number of cars selling at about $35,000, Brauer said, and they all have about the same driving range of 60-90 miles. The 2014 Nissan Leaf has an EPA-estimated driving range of 84 miles, while a 2015 Chevrolet Spark EV gets about 82 miles per charge. The driving range restrains experience by vehicles already in this price range keeps owners figuratively tethered to charging stations, KBB executive market analyst Jack Nerad said. “In comparison to the ubiquitous nature of gasoline stations, charging stations are few and far between,” Nerad said. If Tesla's Model 3 can't substantially increase the typical driving range for vehicles in that price bracket, Brauer said, sales will remain on par with the others -- meaning, not great. “Given Tesla's next car, the Model X, has already been confirmed as small than the current Model S, with a lower driving range, we're already seeing a degradation in performance from future models.” Auto Express reported that the Model S is also rumored to be about 20 percent smaller than the Model S and feature cheaper battery technology. “If Tesla Motors can figure out the range issue and the associated charging time/charging station issue, they will strike gold,” Nerad said. “ Otherwise, the EV segment will remain a niche.”