Elon Musk tries to ‘anti-sell’ Tesla Model 3 as production looms
An unlikely naysayer has emerged as Tesla prepares to sell the all-important Model 3 sedan to consumers: Elon Musk himself.
Two months before Tesla plans to begin production of its first vehicle to sell for near mass-market prices, the chief executive told investors he’s concerned expectations are too high. Tesla will be “anti-selling” the Model 3, offering no test drives or advertising for six to nine months, he said after reporting a first-quarter loss.
“We’re doing our best to clear up that confusion so people do not think that Model 3 is somehow superior to Model S,” Musk said on a conference call.
“Model S will be better than Model 3, as it should be, because it’s a more expensive car.”
The Model 3 is the linchpin in Musk’s plan to bring electric cars to the mainstream. Tesla is targeting output of a million cars per year by 2020, a sharp rise from the roughly 84,000 the company produced in 2016. Reaching that ambitious goal will require ample sales of lower-priced vehicles such as the Model 3 rather than the pricey vehicles it has offered so far.
Slated to start at about US$35,000 before options or incentives, the Model 3 will be capable of driving roughly 345 kilometres between charges. The cheapest version of the Model S starts at around US$70,000.
The Model 3 will have less range, acceleration, power and room than the Model S. But because the “3” moniker conjures the impression of a next generation to buyers used to upgrades — think the iPhone — some existing customers erroneously think the Model 3 will be a step up.
Tesla has seen some effect on Model S orders as a result of the misunderstanding, according to Musk. While the company began to take action to correct this about a month ago, “that message has not filtered down to all of our customers.”
Musk’s comments and Tesla’s report of an almost US$50 million drop in customer deposits “might indicate an Osborne effect in S/X orders,” Brian Johnson, an analyst at Barclays, wrote in a note to clients, referring to the unintended consequence of announcing a future product.
Tesla first unveiled the Model 3 in March 2016 during a late-night party at the company’s design studio near Los Angeles. Thousands of fans stood in lengthy lines at Tesla stores to place US$1,000 deposits for the vehicle. Musk hasn’t given an updated reservation count since the carmaker said it had taken about 373,000 as of May 2016. The “anti-sell” strategy hasn’t had an effect on that number, according to Musk.