Tesla CEO Elon Musk has confirmed an Auto Express UK report that the company's next car after the Model X SUV (pictured above) will be called the Model 3 and retail for $35,000.

That puts it well under the luxury-focused Model S, which starts at $69,900 and usually sells in the $80,000 to $90,000 range, depending on options and trim level. If the Model 3 (pictured below in mock-ups created by Auto Express) is as good as the company's previous cars, automakers should be very concerned—especially established stalwarts like BMW and Mercedes.

The biggest issue with electric cars is range. But like other Tesla vehicles, the Model 3 could render it a non-issue in most circumstances. Musk claims the Model 3 will travel over 200 miles on a single charge. Tesla has already pulled this off twice before: first with the now-defunct Roadster, and again with the top three tiers of the Model S sedan (the company has since discontinued the base model, which got 160 miles of range).

So there's no question the company has the technology. There's also no question the company's cars perform; the now-defunct Tesla Roadster did 0-60 in just over four seconds, while the Model S does it in under six. And both are capable handlers.

The real question is, can Tesla build and sell a 200-mile electric car at $35,000 profitably? If it can, it would significantly impact the auto industry. A smaller, $35,000 companion to the Model S would position the Model 3 against a slew of so-called near-luxury cars—most notably the BMW 3 Series, as well as the Audi A3 and Audi A4, the Mercedes C-Class, the Lexus IS 250, and new Acura TLX.

That's still not quite mainstream vehicle territory—the average sale price of a car in 2014 in the U.S. is roughly $31,000, and most mainstream sedans sell in the $25,000 range. Think either loaded Civics and Ford Focuses, or modestly equipped Accords and Camrys. But it's within striking distance, and not at all unreasonable for such a technology-infused vehicle.

Range is the Key for EVs

I've been negative about electric cars from the beginning, and it's always been about range. The environmental benefits are tremendous; there's no doubt of that, and even car enthusiasts can't complain given the speed of the Model S. But most electric cars, like the Nissan Leaf, the Ford Focus EV, and the Honda Fit EV, have less than 100 miles of realistic range, and all of them take hours to charge up.

When you have less than 100 miles of range, you have either a commuter car for city-bound folk that can somehow also afford a house with a garage to charge the car in, or you have a second or third car for everyone else at best—which means it's essentially a luxury proposition for the upper middle class and higher. If you can't fuel up in five minutes and keep driving, you can't use it for longer-distance trips unless you're on vacation, and don't mind hanging out near a charging station for large portions of the drive. 

Tesla's cars are exceptions, and have been total proof of concepts for an EV-based world. But they're also heinously expensive. Once you have a reasonably priced EV that also has several hundred miles of range, the potential market for it skyrockets in size. (GM didn't see that success with the Chevy Volt, but it's not a pure electric car, and for $40,000 it's not the least bit luxurious or special otherwise.) You still can't easily take long trips with one, but you can use it for all sorts of other things. (Tesla is even deploying supercharging stations that can charge the battery in an hour, although that's still about 55 minutes too long in a country with such a huge land mass and entrenched car culture.)

Tesla is targeting 2016 as an official unveiling for the Model 3 before it goes on sale in 2017. That's plenty of room for what is now vaporware to come to market, even for cars, which traditionally have development cycles on the order of three to five years. Let's hope Tesla can pull this one off.