Tesla Will Play for Maximum Impact With Model 3 Crossover

Telsa Motors Opens New "Supercharger" Station In Fremont, California
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Ever since Tesla Motors hinted of a future car that would be affordable enough for the mass market, we’ve been short on details and prototypes but long on anticipation. If the ride dubbed “Model 3″ were anything like its predecessor, could Tesla exceed its greatest expectations? You had to consider it a possibility, but when news came that Model 3 will have both a crossover utility vehicle (CUV) and a sedan wearing its badge, the project looks more epic than ever.

According to the Wall Street Journal, Tesla CTO J.B. Straubel told attendees at the EIA Energy Conference that a CUV would come along with a passenger car when the electric vehicle maker debuts its Model 3 lineup. Though rumors of this mass-market EV have circulated for several years already, there was never much speculation on this front, though there have been questions about why we have not seen a concept version while GM has already shown off its Chevy Bolt EV prototype. Straubel said both would come on a new platform dedicated for the third-generation Teslas.

Most people agree the limited range of affordable electric vehicles (between 75 and 100 miles) had kept these cars out of the mainstream. They are simply not practical for the bulk of the U.S. market buying 16 million automobiles per year. EVs like the Chevy Bolt and Model 3, both expected to crack 200 miles on a charge and cost less than $40,000, would change the dynamic dramatically.

However. the yen consumers have for utility vehicles would remain in the mass market for both the EV and hybrid segments. Solutions like the Model X (recently confirmed for September delivery), Volvo XC90, and Audi Q7 will continue the trend of luxury plug-in EVs, but a look at current sales figures suggests the mainstream electric CUV market would be enormous.

mitsubishi Outlander PHEV
Source: Mitsubishi

In 2015, five of the 15 best-selling vehicles in the U.S. have been crossovers and each of them costs below $25,000. The fastest gainers are the Nissan Rogue (up 33% through May 2015), Chevy Equinox (up 25%), and Toyota RAV4 (up 24%), while the Ford Escape and Honda CR-V are maintaining their high-volume appeal.

While there is no plug-in electric crossover segment to speak of yet in the U.S., the numbers from Europe reveal these products sell big. Through April, the Mitsubishi Outlander PHEV has been the best-selling EV in England and pushed the euro zone’s totals 60% beyond the U.S. numbers for the period. The same Mitsubishi plug-in took second place on the EU plug-in sales list in 2014, with a starting price of 42,000 pounds (over $60,000) in the UK.

Tesla, which will have to spend huge sums to develop a Model 3 crossover, will look to corral this market as it materializes in the EV segment. The company’s goal of 500,000 sales by the end of the decade needs a huge boost from its current pace of 55,000 projected sales in 2015. A Model 3 sedan makes that number more palatable for investors and green car enthusiasts, but a Model 3 crossover could make it a sure thing. Either way, the third-gen Tesla project just elevated from hugely anticipated to epic status.