Tesla is preparing to ship its Model X SUV, but investors are already looking forward to the Model 3.

Investors believe that the company has the potential to make electric vehicles a mass market item, and as a result Tesla is valued very highly. The company aims to sell 500,000 vehicles per year by 2020, and a large part of the increased volume will be driven by the Model 3.

Investors Already Anticipating Tesla Motors Inc Model 3

Analysts excited by Tesla Model 3

Tesla CEO Elon Musk has previously stated the the Model 3 will sell for around $35,000-$40,000, significantly less than the existing Model S which has a starting price of $60,000 including tax credits. The company has not revealed the pricing structure for the upcoming Model X.

The company reported Q2 results last week, revealing adjusted losses of 48 cents per share on $1.2 billion in revenue. Analysts had predicted an adjusted loss of 59 cents per share on $1.17 billion in revenue.

Tesla plans to release the mass market Model 3 sedan in 2017. At the moment there has been no physical evidence of the vehicle, but there may be a showcase in March 2016.

Investors divided on Tesla

The planned expansion in volume will be enabled by the Gigafactory, a collection of factories financed by Tesla and Panasonic. During last week’s conference call, Tesla said that the Model 3 should not affect Model S and Model X production in 2016, but there is a chance that it will in 2017.

Preparations are underway for the Model 3, and Tesla says it has upgraded its paint shop in order to handle 10,000 a week. The company has also invested large sums in its foundry to improve casting capacity, and other investments involve stamping and metal sheet forming technology.

Tesla is already trading at a very high valuation, largely based on predictions of its future performance. The company divides analysts into two distinct camps: the first believes that Tesla will change the automotive industry, and the other says that it is grossly overvalued.

While the Model X could improve sales figures at the company, it is the more affordable Model 3 which has the potential to be a game changer. The company is one of a number working on automated vehicles, and could drive significant change in the automotive industry.