Tesla CEO ‘anti-selling’ Model 3
An unlikely naysayer has emerged as Tesla prepares to market 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 215 miles (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 impact 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.
Musk hasn’t given an updated reservation count since the carmaker said it had taken about 373,000 as of May 2016. The “antisell” strategy hasn’t had an effect on that number, according to Musk.