Model 3 holds promise – and peril – for Tesla

Teslas Mainstream Moment

FREMONT, Calif. — For Tesla, everything is riding on the Model 3.

The electric car company’s newest vehicle is set to go to its first 30 customers Friday evening. Its $35,000 starting price — half the cost of Tesla’s previous models — and 215-mile range could bring hundreds of thousands of customers into the automaker’s fold, taking it from a niche luxury brand to the mainstream.

Those higher sales could finally make Tesla profitable and accelerate its plans for future products like SUVs and pickup trucks.

Or the Model 3 could dash Tesla’s dreams.

Potential customers could lose faith if Tesla doesn’t meet its aggressive production schedule, or if the cars have quality problems that strain Tesla’s small service network. The compact Model 3 may not entice a global market that’s increasingly shifting to SUVs, including all-electric SUVs from Audi and others that are going on sale soon.

Limits on the $7,500 U.S. tax credit for electric cars could also hurt demand. Once an automaker sells 200,000 electric cars in the U.S., the credit phases out. Tesla has already sold more than 126,000 vehicles since 2008, according to estimates by WardsAuto, so not everyone who buys a Model 3 will be eligible.

The Model 3 has long been part of Palo Alto, California-based Tesla’s plans. In 2006 — three years after the company was founded — CEO Elon Musk said Tesla would eventually build “affordably priced family cars” after establishing itself with high-end vehicles like the Model S, which starts at $69,500. This will be the first time many Tesla workers will be able to afford a Tesla.