Tesla’s Model 3 draws crowds at Stanford Shopping Center
By putting its electric sedan on display, the company not only stands to sell more cars, it can up-sell reservation holders, analysts say
Tesla’s entry-level sedan may be suffering production delays, but that didn’t quash the excitement at the first-ever appearance of the Model 3 in a Tesla showroom Friday at Stanford Shopping Center in Palo Alto.
The company opened the doors of its showroom in the ritzy mall at 10 a.m. and by noon a steady stream of people was coming in to check out the vehicle — Tesla’s bid to bring an electric vehicle to the mass market — and sit inside it.
Many who showed up already had
Model 3 reservations.
Pleasanton nuclear physicist Anuj Purwar stood in line with hundreds of other people at the same showroom two years ago to put in his order for the Model 3 — sight unseen — when Tesla started taking preorders.
Since then, he’s caught sight of a few of the cars on the road, but “it’s very different to see it in the showroom,” he said.
“It actually looks bigger. It seems quite spacious,” Purwar said.
The Model 3 has suffered production problems leading to delivery delays, and by putting it on display, Tesla is signaling that it’s approaching a strong production rate, analysts said, but also taking a risk it may frustrate reservation holders by showing them a car they can’t yet have.
For James Bentajado, a 27-year-old nurse from Milpitas, the effect was somewhat different. “There have been too many delays,” he said, and the “magic” of the Model 3 was starting to fade for him.
“Now I got to sit in the car — that has brought my momentum back. I’m totally going to continue waiting for the Model 3,” he said.
A long-time Tesla fan, Bentajado only started envisioning himself behind the wheel of one after company CEO Elon Musk revealed plans for the relatively affordable
Model 3, which starts at $35,000.
“That really piqued my interest in getting a Model 3,” Bentajado said.
Though the Model 3 on display — indefinitely, as part of a gradual rollout across the U.S. that saw a similar display Friday only at a Tesla store in Los Angeles — was dark gray, and San Jose human resources professional Annelies Lindemans is waiting for the red one she put a $1,000 deposit on, she, too, was eager to see it as she’s “slightly obsessed” with the car.
“I’ve counted 21 on the roads. I’ve seen every color. I will remain excited until I finally get my car,” said Lindemans, 47.
Tesla, which has been plagued by production delays with every model of electric vehicle, has twice announced holdups in Model 3 manufacturing, and most recently pushed its target of 5,000 cars a month to a point before the end of June. Anyone ordering a Model 3 now will receive it in 12 to 18 months, according to Tesla.
Tesla’s public statements suggest nearly a half million Model 3s have been reserved, but only a few thousand delivered to customers.
“You would like to think that the reason that they’re putting it into showrooms is they think they’re getting close to dramatically increasing the production rate,” said CFRA analyst Efraim Levy. “It’s hard to tell if they’re really ready for that.”
Inviting the public to see and touch the car allows Tesla “to stoke demand for when they get their production optimized,” Levy said. “People who don’t have reservations yet, when they see something in the dealership, that will stimulate additional orders.”
With a $50,000 premium version of the Model 3 in the mall showroom, Tesla has an opportunity to up-sell reservation holders who haven’t yet decided which add-ons they want, Levy said, such as the long-range battery providing an estimated 310-mile range compared to 210 miles for the basic car.
Tesla is producing a premium version first, and will invite reservation holders who want the standard car to make that selection early this year, according to the company.
Still, Model 3 reservation holders impatient with the delays may find the showroom displays aggravating, Levy said.
“You can increase the frustration for people not getting their vehicles — they see it and now they don’t have it,” he said.
But exceptionally irritated would-be Model 3 owners are likely not a big worry for Tesla, said Karl Brauer, executive publisher for Kelley Blue Book and Autotrader.
Regarding Tesla, there are three kinds of people, Brauer said: the majority, who have no interest in the cars; a much smaller group of hard-core fans; and a tiny number of people who reserved a Model 3 and are upset by the delays. Fans will accept the holdups, and the number of disenchanted people is probably so small as to be inconsequential for the company, Brauer said.
However, if Musk is going to deliver on his promise to bring an electric vehicle to the masses, Tesla will have to make hundreds of thousands of Model 3s a year, Brauer said.
“I don’t know how long he can continue to tell us he’ll have … high-volume production capabilities without actually having them,” Brauer said. “That may be OK with some of his customers. But you have Wall Street and investors watching as well.”