Affordable Model 3 is Tesla's biggest test yet

DETROIT (AP) — The promise of an affordable electric car from Tesla Motors had hundreds of people lining up to reserve one.

At a starting price of $35,000 — before federal and state government incentives — the Model 3 is less than half the cost of Tesla's previous models.

Santucci added that he didn't want to wait too long to order a car because the federal tax credit of $7,500 will sunset once Tesla sells 200,000 vehicles in the U.S. That's likely several years away, but customers like Santucci want to be sure they qualify.

[...] the Model 3 is already changing the industry, spurring competitors to speed development of electric cars and improve their battery range.

In a 2006 blog post, Musk said Tesla planned to build "a wide range of models, including affordably priced family cars" in order to speed the world toward a solar-powered future.

U.S. buyers remain skeptical of electric cars, and low gas prices haven't helped already anemic sales.

Sales of new electric vehicles grew 6 percent in the U.S. last year, but they still remain less than 1 percent of the overall vehicle market, according to IHS Automotive.

Tesla previously assembled its battery packs with battery cells made in Japan by Panasonic Corp. But Tesla and Panasonic are building a massive, $5 billion factory in Nevada which will supply batteries for the Model 3.