THE eye-catching falcon-wing doors that adorn Tesla’s Model X (see picture) set it apart from other big and expensive SUVs. But like the firm’s Model S, a stylish and speedy saloon, the biggest difference lies under the bodywork: it is powered by a battery. Tesla has accelerated into the automotive fast-lane by making electric cars that appeal to rich folk keen to burnish their credentials as environmentally aware techies. But at the end of March it is launching the Model 3, a cheaper motor aimed at the upper end of the mass market. It will be a far harder sell.

Tesla has hitherto thrived in a niche. Other carmakers crammed bulky and expensive batteries into petite “city” cars. Tesla put a bigger power-pack into large and expensive ones (prices start at $70,000), more readily absorbing the cost of the battery. This also gives the cars a decent range of more than 250 miles (400km) between charges, and lightning acceleration. In 2015, after just over ten years in business, Tesla’s sales surpassed 50,000 cars. By 2020 it hopes to sell 500,000 a year, mostly Model 3s. These will cost as little as $35,000 (before the generous subsidies many governments dish out). But it is entering a part of the market where competition is intense and profit margins slimmer.

Its achievement so far is, nonetheless, remarkable. The roadside is littered with the wrecks of new entrants unable to take on the established carmakers, from Tucker in the 1940s to DeLorean in the 1970s and latterly Fisker’s failed bid to sell upmarket petrol-electric hybrids. Tesla’s classy design and nifty technology—a touchscreen instead of an instrument panel, and autonomous-driving capabilities—have ensured that only the Mercedes S-Class, which Daimler-Benz has spent decades refining, outsells it among large luxury saloons.

Tesla has shown that the barriers to entry in the car industry are far lower than widely assumed. The company bought a factory in Fremont, California, from GM and Toyota for just $42m, after the American firm pulled out of their joint venture and filed for bankruptcy in the wake of the financial crisis. Tesla also bought equipment to kit it out cheaply, from other carmakers struggling to cut their capacity.

It is run frugally. Sanford C. Bernstein, a research firm, reckons Tesla’s total capital spending and outlay on research and development so far is under $4 billion—one-seventh of what Volkswagen spends in a year. And in Elon Musk, its ebullient boss, it has a figurehead whose relentless promotion has quickly established Tesla as a luxury brand in an industry where convention suggests this should take 25 years.

Tesla has also rewritten the economics of making electric cars. It tackled high costs by stringing together hundreds of small, mass-produced laptop batteries. Tesla claims that its power-packs cost half what big carmakers pay their suppliers for custom-designed large-format batteries, and that its Gigafactory, a huge battery plant close to completion in the Nevada desert, will cut costs by another 30%.

It will need all its superior performance to stay ahead. Tesla currently has no direct competitors. Yet Apple looks set to launch a luxury electric car. Battery costs for other carmakers are also falling fast. In a couple of years Audi, Jaguar and other premium-car makers plan electric vehicles on a par with Tesla’s two priciest cars.

Launching the Model 3 will put Tesla’s business model under far more strain. Other carmakers look on its extreme vertical integration with bemusement. If Mr Musk fancies himself as the next Henry Ford, his factory certainly resembles the Model T’s production line, where iron ore and rubber went in one end and a car chugged out the other. Other carmakers are now largely brand managers, assemblers and systems integrators, ensuring that all the parts they buy from suppliers work in harmony when bolted and welded together. This serves to spread risk and push costs to suppliers. Tesla makes most of its parts in-house. Mr Musk regards this as a competitive advantage. Firms “build value by doing hard things,” he reckons. But tooling, forging and design suck up capital.

The firm is far more integrated even than carmakers of yesteryear. It has sought to attract buyers and tackle “range anxiety” by building its own worldwide network of more than 3,500 roadside “superchargers”. These can put an 80% charge on the battery in 40 minutes, and Tesla drivers can charge up without charge. It is a bit like Ford opening its own filling stations and giving away the petrol.

Whereas other carmakers sell their vehicles through networks of independent dealers, Tesla sells directly to the public, through its website and in showrooms located in shopping centres. This means it keeps the retail markup, but it is unclear how much, if at all, this offsets the cost of maintaining the showrooms. And dealer networks are useful in other ways: they assume a lot of risk by paying for cars when they take delivery of them, rather than when they sell them.

In all, Tesla’s way of working requires lots of cash. Barclays, a bank, thinks the firm will burn through $11 billion over the next five years, and will not generate significant profits until then. Investors have willingly stumped up so far but many analysts question whether Tesla is worth its current market capitalisation of $29 billion, more than half the value of GM, which makes nearly 10m cars a year. The worry is that entering the mass market will change the way Tesla makes cars, the sort of customers it chases and the competitors it faces.

Tesla thinks of itself as a technology company but the Model 3 will make it more of a large-scale manufacturer. It is unclear how well suited it will be to the task of designing and churning out cars at far higher rates than now. Mr Musk admitted that the design of the Model X was overly ambitious, especially the fancy doors, delaying its launch by many months.

Tesla will henceforth have to attract customers who want to buy a car not an engine, as Berenberg, another bank, puts it. The wealthy customers it has now often own more than one car, and can afford the luxury of charging facilities at home. They use the Tesla to salve their consciences with a “trip to church on Sunday”, as the boss of a rival carmaker jokes. Buyers of its cheaper model may rely on it as their sole vehicle, and lack space for home charging, making its range and the availability of public chargers more important.