Tesla received permission to start selling its Model 3 in Europe,
clearing the final hurdle in bringing the electric-car maker’s top
seller to the home turf of Audi, BMW and Mercedes-Benz.

Deliveries should start in February for the Long Range Battery
version of the midsize sedan – the same variant first sold in the US – according to Tesla, after Dutch vehicle authority RDW issued the OK.

The European launch is crucial for Tesla as it navigates what chief executive officer

Elon Musk called a
“very difficult” road ahead. The company is cutting jobs so it can
profitably deliver lower-priced versions of the Model 3, Tesla’s first
car targeted for the mass market.

Musk has pointed to sales of the sedan
in Europe and China as a main reason he isn’t concerned about any
potential setback caused by a halving of the US federal tax credit, to
$3 750, on Tesla purchases as of January 1.

With the Model 3, Tesla also has an opportunity to broaden its attack
on the premium car market dominated by Germany’s

BMW,

Daimler -owned Mercedes-Benz and

Volkswagen’s Audi. Tesla, based in Palo Alto, California, said in its
third-quarter shareholder letter that “the midsized premium sedan
market in Europe is more than twice as big as the same segment in the
US.”

The Model 3 became the top-selling luxury car there last year,
outstripping the Audi Q5, BMW 3 Series and other well-known models.
Analysts and industry executives, however, have observed that
competition with Tesla cuts across traditional categories.

“Teslas are stealing customers away from vehicles that you might not
expect,” EvercoreISI analyst

Arndt Ellinghorst said in a report last week, after

Toyota’s North American chief,

Jim Lentz, discussed the impact of the Model 3 on the Prius, a hybrid
that’s not marketed to luxury buyers. The Toyota executive said Tesla
has created a new segment of so-called technology-driven products.

Traditional automakers are fighting back with their own electrified
models. Jaguar began delivering the I-Pace all-electric sport utility
vehicle last year, while Daimler unveiled its EQC electric crossover and
Audi followed with the E-Tron.

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