Musk said the vehicle will have several features of its more expensive sibling, the Model S. The Model 3, for instance, will offer autopilot, which enables the vehicle to drive itself on highways and other roads. Musk claimed it can go from 0 mph to 60 mph in under 6 seconds. (See photos of the car below.)
The car seats five adults and has two spaces for luggage in the front of the car and in the back (Musk said a 7-foot surfboard could fit inside.) It was also clear from the presentation that the $35,000 version would be a stripped down version with very few options.
While the car won't be delivered until late 2017, fans of the company flocked to its stores to sign up to buy one, with some camping out on sidewalks on Thursday. Musk said that 115,000 people had put down $1,000 deposits to pre-order the Model 3.
By purchasing a Tesla, many of those early adopters will be eligible for a $7,500 federal tax credit. The incentive is aimed at driving adoption of electric cars. But the benefit will not last forever. That's because the rules require manufacturers like Tesla to start phasing out the credits after selling their 200,000th electric vehicle in the United States.
Tesla has already delivered just shy of 110,000 electric cars in the Tesla Roadster, the Model S and the Model X, the company confirmed Friday. According to a monthly tally by Inside EVs, Tesla has sold roughly 66,700 vehicles in the United States alone since 2011. Those U.S.-based vehicles count toward that 200,000 cap.
Once Tesla reaches that point, it can continue offering the credit at reduced values for up to a year as it phases out the benefit. But after that year, no Teslas will be eligible — meaning that buyers will be paying full freight for their vehicles.
Despite the late-night event (the presentation occurred near midnight for East Coast residents), images of the car filled social media as soon as it was unveiled.
The Model 3 represents a huge moment for the company, which has seen its stock fall in the latter half of last year from $280 down to $240. On Thursday, it closed regular trading near $230. Tesla's stock opened up higher at more than $245 before stabilizing midday at $236.
The new vehicle could carve a path for the company to regain some of the momentum it had when its cars were garnering rave reviews. In October, Consumer Reports dinged the Model S for reliability problems, even though the same publication had otherwise issued a glowing review of the vehicle.
If it takes off, Tesla's new car could also accelerate the spread of electric car technology, similar to how the iPhone launched the smartphone industry.
"Elon is off to a good start with the design of the all-new Tesla Model 3," said Tony Lim, an analyst at Kelley Blue Book. "The Model 3 is perfect blend of the Model S and Model X’s best design features."