Impressive Launch for the Tesla Model 3

May2016_Tesla

By Ed Burke, Dennis K. Burke Inc.

Even the most enthusiastic Tesla fans couldn’t have predicted the jaw-dropping demand for the new Model 3. About 400,000 people have slapped down a $1,000 deposit for an electric sedan that won’t go on sale for nearly two years. The Tesla Model 3 was one of the biggest automotive launches in years, taking preorders for about $13.7 billion worth of the electric cars.

A stylish electric car with a starting price of $35,000 and a range of 215 miles is a pretty good story, but it’s all of the tech stuff packed into that car that’s driving the conversation. Tesla’s innovations like software updates, Heads Up Display (HUD), and infotainment features seem to draw in and engage a growing number of tech-hungry consumers.
The huge demand completely caught Tesla Motors CEO Elon Musk off guard. Musk said that before the launch, he was anticipating reservations somewhere in the 62,000 to 125,000 range. This prompts the question of whether Tesla can gear up and handle the demand in a timely fashion. Even Musk seems to be wondering, saying that he may have to rethink production plans and open a factory in Europe.

Since the product launch, the Tesla CEO has been busy on Twitter, responding to questions and concerns over the Model 3.

A Nice Looking Car
Tesla fans were expecting a stylish and unique looking Model 3, and it is. Aiming for an aerodynamic coefficient of 0.21, the Model 3 has a very clean and sleek design. There was a bit of debate on social media over the unique front design, to which the Tesla CEO responded by tweet with: “some tweaking underway.”

In order to keep the car as affordable as possible, the Model 3 comes with two-wheel drive, but a dual motor AWD option is available.

The first thing you notice in the interior is that there is no traditional instrument cluster on the dash, which has been replaced by a 15” display in the center console.

Among Tesla enthusiasts, there is a lot of excitement over speculations that the car will have an HUD option. They’re talking about cutting-edge, HUD technology – a transparent visor that presents data without requiring users to look down or away from their usual viewpoint. Asked about the missing dashboard and the possibility of HUD technology, Musk said that it would all make sense when more Model 3 details are revealed.

The steering wheel in the Model 3 prototype seemed very plain and lacked imagination. Musk addressed the issue on Twitter, suggesting that the real steering wheel will be much more advanced, even going so far as to liken it to a spaceship.

Americans are keeping their cars longer, and a software update down the road to help make your car feel “new” again sounds appealing. Tesla offers over-the-air software updates to their cars. Security issues are a serious concern, but Tesla has shown that it is possible to architect connected cars safely. The company offers regular upgrades to traditional infotainment features such as clock apps and climate control, but also to driving performance and automation features.

Watch the Speed Bumps
Tesla has a huge and loyal fan base, but production delays could turn into a major issue. The company has missed deadlines with previous models, and delays could turn away some buyers. The more established automakers could also have a reliability advantage over Tesla, which has had its share of problems on current models.

There is also some concern about the federal tax credit and state rebates for electric car buyers. The $7,500 federal tax credit is cut in half after the first 200,000 cars are sold by each manufacturer. The credit could possibly be phased out before many of those ordered can get it. “We build our vehicles, including the Model 3, to offer compelling value without any incentives,” Tesla said in a statement.

In 2008, the Tesla Roadster was the only electric car on the market. There are now 16 pure electric vehicles on the U.S. market. Introduced in 2010, the Nissan Leaf is the best-selling electric car, with a limited range of about 100 miles. Nissan had about 200,000 global sales by the end of 2015. Tesla’s Model 3 could easily top that number in a year or two.

Other automakers are also getting ready to unveil 200-mile electric cars in the same price range. For example, the Chevy Bolt, an EV hatchback with a range of over 200 miles is set to hit the showrooms later this year. Sales are expected to be decent, but nowhere near the Tesla tally. There’s global competition too. In 2015, China took the top spot for EV sales away from the U.S.
Electric cars currently account for about one percent of U.S. auto sales, and industry analysts point out that winning over the enthusiast is very different from winning over mainstream consumers.

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