Tesla Chief Executive Officer hands over more than 30 cars to early buyers even as the company vows to produce 500,000 vehicles next year - nearly six times its 2016 production.

A longer-range version of the car is priced at $44,000 and will drive 500 km on a single charge.
A longer-range version of the car is priced at $44,000 and will drive 500 km on a single charge.

Tesla Chief Executive Officer Elon Musk said on Friday that the Model 3 had over half a million advance reservations as he handed over the first 30 to employee buyers, setting the stage for the biggest test yet of the company's strategy to become a profitable, mass market electric car maker.

Outside Tesla's Fermont factory in California, Musk showed off the $35,000 base vehicle with a range of 350 km on a charge that marks a departure from the company's earlier luxury electric cars.

Musk took to the stage driving a red Model 3 and said that Tesla has produced 50 of the vehicles so far, including 20 for testing purposes.

Musk acknowledged that it would be "quite a challenge" to build the car during the early days of production.

"We're going to go through at least six months of manufacturing hell," Musk said.

Elon Musk acknowledged that it would be
Elon Musk acknowledged that it would be "quite a challenge" to build the car during the early days of production. (Reuters)

Production challenges

The over half a million reservations are up from about 373,000 disclosed in April 2016. Customers pay $1,000 refundable deposits for the car, which is eligible for tax credits.

Any new buyers would likely not receive their car until the end of 2018, Musk said.

A longer-range version of the car is priced at $44,000 and will drive 500 km on a single charge. The cars feature a streamlined dashboard devoid of buttons or knobs, with a 15-inch touchstream display to the right of the driver.

Tesla faces major hurdles living up to the Model 3 hype. The 500,000 vehicles Tesla vows to produce next year are nearly six times its 2016 production.

Model 3 part of Musk's broader plan

The Model 3 is part of Musk's broader plan to build a clean energy and transportation company that offers electric semi-trailer trucks, rooftop solar energy systems and large-scale battery storage systems.

Until now, Tesla has operated as a niche producer of luxury electric vehicles, with a charismatic, showman CEO who regularly interacts with fans on his Twitter account.

Now loss-making Tesla is trying to move into a different league, building vehicles in high volume for customers able to pay only a few thousand dollars more than the average price of a conventional car or truck sold in the United States.

Source: Reuters