Is Tesla underestimating Model 3 demand?

[pvogel]

Laughable. If you can afford a $800 smart phone you can afford a $1000 FULLY REFUNDABLE deposit.

The smart phone is available to you immediately and, in the typical scenario, isn't purchased outright, it's cost is buried in the cost of monthly cell service.

$5000 is the historical deposit on a production vehicle, I discounted that to $1000, but we don't know what the deposit amount will be. But even fully refundable, it's a lot of money to have tied up where it cannot be accessed in an emergency and doesn't earn interest.

So, yeah, I'm saying I'd expect reservations on the 3 to track lower, as a percentage of those interested in buying the car, than what we saw with the S and the X and I expect total reservations to be lower in the US than there were for the X at vehicle launch. That may be made up for in Europe where people may have been waiting for a smaller, not necessarily cheaper, car.

Peter+

 

[jesselivenomore]

I would be shocked if Model 3 reservations didn't surpass total Model X reservations within a month, if not a week.

 

[pz1975]

I would be shocked if Model 3 reservations didn't surpass total Model X reservations within a month, if not a week.

Agree. The vast majority of people who can afford a $35-60K car can afford to deposit $1,000-1,500 (I assume it will be this since X was $5K and S $2.5K) for a product that will be massively superior to its competition. I don't know what the reservation totals will be but I expect at least 10x of the X level by the time the 3 is produced.

 

[jkk_]

But do I really gain anything by reserving within the first month, or even first year? Especially if I'm aiming for the "higher" end of the line which has been previously been pushed ahead in the manufacturing phase anyway. What I will lose is the ability to gain interest for the $1000 during the wait period. Then again, since I live in Finland/Europe we will probably get "punished" anyway and US deliveries will be done first?

That's what I'm thinking about, and that's why I'm a bit skeptical how big the reservations will be. Maybe I'm just overly pessimistic regarding adoption of EVs, *shrugs*

 

[adiggs]

But do I really gain anything by reserving within the first month, or even first year? Especially if I'm aiming for the "higher" end of the line which has been previously been pushed ahead in the manufacturing phase anyway. What I will lose is the ability to gain interest for the $1000 during the wait period. Then again, since I live in Finland/Europe we will probably get "punished" anyway and US deliveries will be done first?

That's what I'm thinking about, and that's why I'm a bit skeptical how big the reservations will be. Maybe I'm just overly pessimistic regarding adoption of EVs, *shrugs*

The reality of course is that nobody knows, and nobody can know. We all have coherent and reasonable theories about what will happen, and what it will mean to Tesla as a company, and to EV adoption in general.

Here is a different way of thinking about the interest gain on the $1000. If you could earn 1% on that money (savings accounts in the US are far, far below 1%, and have been for several years), then you are forgoing $10/year (I know it's a touch more). I believe that there are a large number of people that they would be fine forgoing $20 interest for a 2 year wait as the price for not waiting a year or more to be able to order a car. Actual interest rates are closer to 0.10%, so now it's more like $2. Or if Tesla keeps the reservation deposit at $5k (as I am guessing they will do, as a mechanism for dissuading people from getting on the list earlier), then we're back to $10 of forgone interest.

The point of course is that USD interest rates are low, have been for several years, and can reasonably remain low for awhile. As a result, the actual forgone interest in absolute dollars is very small.

Heck - the $40k Sig X deposit over 3 years has been worth about $120 in forgone interest (assuming 0.10% interest).


That doesn't mean that I'm right. It's just another way of looking at the same available facts. Of course I can't speak to demand levels in Finland. I only know what I experience among friends, acquaintances, and strangers that I meet at Oregon area EV events. The number of conversations that amount to "cool - a Tesla - I can't wait for these to be affordable" is just mind boggling. What I see is Tesla competing with non-consumption, that the currently available EV's are vastly inadequate for a big swath of the market's needs, they are highly desirable far beyond the limits of those already driving them, and as a result - consumers will buy as far up the feature stack as they can personally afford in shockingly big numbers when the acquired feature set starts to look like reasonable use. All of the rest of the car manufacturers that don't see this and aren't preparing today for it, are going to be overwhelmed at how quickly the market will move.

We've been seeing it in sports cars and luxury sedans, we're about to see it in luxury SUVs in 2016, and in a few years - I believe we're going to see it in a more affordable car.

 

[Spidy]

OK, but you generalize too much ! And draw some invalid conclusions from your specific circle of friends.

1. Europe is NOT one monolithic market, or even one big blob of people even in a specific country. TSLA only needs 1 percent of the market is be significantly successful for TSLA.

2. 100 PC of a potential market does NOT make decisions on price alone. Quality, finish, handling, power, acceleration, overall technology etc ...besides design / looks will matter to all, to different levels on each factor.

3. Very few people in the broad US population know Elon Musk or Space X ( neither are household words), and a very, very insignificant percentage of those that do will buy a Model 3 based on Space X.

4. As marketers, global US corporations have been successful at marketing their brands and products and services and those that many Europeans ( including those in your circle of friends ) simply do not like or even despise. And, many of the US corporations ( with no Elon Musk type status or PR CEO at their companies ) also have had moderate success even with cosmetics and fragrance marketing in Europe.....heck even Budweiser sells and has significant revenues in Europe....as do high end US clothing brands, or accessory ( like high end luggage ) brands.

So, I believe a lot of your take on this subject is a personal viewpoint influenced by your small ( statistically speaking ) circle of friends . And, I am speaking here as guy who has had decades of experience in Fortune 100 global business and P & L management and with European marketing and sales teams, all done on a country specific, and segment by segment market in all/ each of the European countries .

1-2 pc of the market ( within 5 years of launch ) should be eminently doable for TSLA, with the right product in all its dimensions. And, particularly if leasing is attractively packaged and marketed, on a country specific basis.

1. You still have to get to one percent first. And if you want 1% across Europe then you need big markets like Germany. Norway is not going to make up for the lack of sales in Germany with the Model 3. Not even to mention poorer eastern European countries as well as those in the South which still have very little Model S penetration.

2. Sure those are all factors, but how important are those to these people? If they cared why do they drive a Skoda Oktavia and didn't already get a C-Class?

3. That's probably still a lot more than in Germany. Did you see the Reddit frontpage when the SpaceX landing was successful?

4. Some have. Some haven't. You won't find trucks here. Even big SUVs are not as popular. Heck whole companies like Walmart just failed in Germany. Even google struggled with street view. How happy will Germans be that their car is in sync with a US company 24/7?

Germans were standing in line at the German Economics Ministry to hear Elon Musk speak a few short months ago. About half the questions were about SpaceX and Mars colonization. German Economics Minister Sigmar Gabriel mentioned that the Economics Ministry is not used to hosting a rock star reception.

Musk biggest applause came when he said (paraphrasing); life can not simply be solving one miserable problem after another, we must have something exciting to look forward to, a reason to get up in the morning.

Last time Elon spoke in Oslo the speech needed to be moved to a concert hall to accommodate demand.

That's not a indication at all. Of course people will come when the Minister of Economics shows up anywhere. And renewable energy or EV enthusiasts will obviously also find their way there as well as Elon Musk fans.

Watch this with them.

ORBCOMM-2 Full Launch Webcast - YouTube

Come back to the forum and share some new comments.

Happy New Year from the US!!!

Honestly I think they would cringe more than somehow see this as some big step for mankind.

Space just isn't as big here. Just 10% can even name the DLR or ESA when asked for a European Space organization. More toddlers in the US can probably name NASA. The US just has a very different history here and the dream of working for NASA is just very distant in Germany.

 

[Chickenlittle]

The smart phone is available to you immediately and, in the typical scenario, isn't purchased outright, it's cost is buried in the cost of monthly cell service.

$5000 is the historical deposit on a production vehicle, I discounted that to $1000, but we don't know what the deposit amount will be. But even fully refundable, it's a lot of money to have tied up where it cannot be accessed in an emergency and doesn't earn interest.

So, yeah, I'm saying I'd expect reservations on the 3 to track lower, as a percentage of those interested in buying the car, than what we saw with the S and the X and I expect total reservations to be lower in the US than there were for the X at vehicle launch. That may be made up for in Europe where people may have been waiting for a smaller, not necessarily cheaper, car.

Peter+

i disagree. Many do not want the size of S or X. It's not a financial issue but a size issue. 1000 is not an issue for these. Also after BMW 3 series. The deposit not an issue with those. Also with reduction in tax credit many will want to be first in line to capture it

 

[RobStark]

That's not a indication at all. Of course people will come when the Minister of Economics shows up anywhere. And renewable energy or EV enthusiasts will obviously also find their way there as well as Elon Musk fans.

 

[DavidM]

The smart phone is available to you immediately and, in the typical scenario, isn't purchased outright, it's cost is buried in the cost of monthly cell service.

$5000 is the historical deposit on a production vehicle, I discounted that to $1000, but we don't know what the deposit amount will be. But even fully refundable, it's a lot of money to have tied up where it cannot be accessed in an emergency and doesn't earn interest.



Peter+

Families spend $1,000 (or more) all the time to purchase airline tickets several months in advance for their trip to Disney, or their holiday trip to visit grandma. I don't see that as a burden for middle class households. However it might be a burden for lower middle class households, but that's not the demographic that will be purchasing the Model 3. The demographic is middle and upper middle class households. Same demographic as BMW 3 Series customers.