The Model 3 Is the Tesla Faithful's Personal Bodhi Tree
Patience, as we’ve been told, is a virtue. Therefore, the most virtuous individuals occupying the ball of mud we call Earth must be the Tesla faithful currently awaiting their pre-ordered Model 3 sedans. The speed of the vehicle’s launch has been sedate, to say the least. Tesla Motors finds itself plagued by production bottlenecks, which hasn’t helped the already long wait times facing those who dropped a sizable wad of bills just for the privilege of eventually owning its latest model.
However, the lengthy intermission between launch and ownership doesn’t appear to be diminishing their love for the company — a testament to the brand’s difficult-to-tarnish image. Fans of the automaker seem content to wait it out in tranquility like Siddhartha Gautama under the tree of enlightenment.
Bloomberg reached out to 20 Model 3 reservation holders this month, noting that not one had canceled their order. “I just want Tesla to get the Model 3 right, even if it takes them an extra six months,” said Brian Lawley. “I view any delays as a good thing to make sure that the quality is excellent.”
Lawley reserved his Model 3 almost two years ago and doesn’t seem bothered that Tesla Motors has pushed back its original production timeline by over three months. The new goal is to produce 5,000 Model 3 sedans per week by March, instead of the previous December target.
“We believe there is a real passion for the brand,” Nomura analyst Romit Shah wrote in a report underpinning a ludicrously high $500 share price target for Tesla. “It is bigger than loyalty because much of the enthusiasm comes from people who have never owned a Tesla. The only comparable we see is the iPhone.”
Whether or not Tesla’s shares ever hit that mark, the brand already trades at almost double what Apple currently does — making anyone who invested prior to 2014 a fortune. However, the parallels with Apple are fair. While many don’t see the inherent value of waiting in line for the next iPhone, those that do are absolutely convinced of it. Tesla is no different. The hype surrounding both companies is a major source of their power and a prominent factor in their continued success on Wall Street.
“It seems to me that people would be willing to wait since they were never given a firm date when they would take delivery in the first place,” Edmunds analyst Jessica Caldwell said in an email to Bloomberg. “The long wait seems to be building anticipation.”
However, people won’t be willing to wait forever. In August, CEO Elon Musk said around 63,000 people had cancelled their reservations with Tesla. That said, it’s difficult to know what to attribute that to or how much it would hurt the company — especially since new orders continue coming in every week. Until Tesla says otherwise, the Model 3 looks to be holding strong with over 500,000 reservations.
For the automaker to truly take a beating on this, the launch of the Model 3 would have to be an abject failure or become subject to hundreds of thousands of cancellations in the next year. Many have expressed concerns about the possibility of losing electric car tax credits in the United States, but even that doesn’t seem to be a deal-buster for some reservation holders.
“If it goes away, I’ll just have to adjust my budget and pay,” explained Raymond Nash, who reserved his Model 3 the second the option became available. “I’m not happy about the delays, but I’m willing to wait. We know that Tesla has made a few hundred Model 3s, so we know that it is real, and we know that more are coming.”
The company’s plan to ensure that involves a major production bump before next spring. October estimates have Tesla assembling around 42 Model 3s per week. By March, the factory aims to increase average volume to 5,000 units a week. That will be followed by a dual-motor all-wheel drive version of the car and a cheaper offering using Tesla’s standard battery pack — both of which are expected to arrive before the end of 2018.
[Image: Tesla Motors]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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"Bloomberg reached out to 20 Model 3 reservation holders this month, noting that not one had canceled their order." WAIT. Am I the only one who sees the logical contradiction here? If they hold a reservation then clearly they haven't canceler their order. I know a few EV-diehards who canceled Model 3 orders. I know an anecdote isn't the singular of data but Bloomberg wouldn't have found those people in their dataset.
Wishful thinking is what drives Musk's estimated availability dates of his cars as well as T stock price. The idea of under-promise and over-deliver isn't on his radar. Add to that the cluster* that is Tesla the employer and you start to see the real picture behind the hype.