Tesla Receives Regulatory Approval to Build Model 3

Tesla Inc.’s (NASDAQ: TSLA) future relies on its ability to mass produce cars for the middle class. It has received regulatory approval to begin to build its Model 3, which will carry a price tag of between $30,000 and $40,000. The company now has the chance to sell several hundreds of thousands of cars a year.

CEO Elon Musk tweeted:

Model 3 passed all regulatory requirements for production two weeks ahead of schedule. Expecting to complete SN1 on Friday.

In a later tweet he said:

Handover party for first 30 customer Model 3’s on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500.

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The waiting list for the car has reached nearly 400,000. Musk expects Tesla’s production levels to hit 500,000 cars a year in the next two years.

Tesla has a market cap of $50 billion, which puts it ahead of Ford Motor Co. (NYSE: F). That makes the success of the Model 3 even more important.

Tesla has had two much more expensive models in the field for some time. The original Model S sedan is priced between $75,000 and over $125,000 for the fastest version. The SUV Model X costs about $100,000.

The race for mass production and mass sales of electric cars is now on. Virtually every large car manufacturer in the world has a large electric car initiative. General Motors Co. (NYSE: GM) has launched the all-electric Chevy Bolt, priced at about $35,000. The Model 3 will compete with this.

Musk has both the approval to build the Model 3 and massive customer demand. Whether he can stay ahead of competition is another matter, one that is also the key to his company’s market valuation and success.

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