It hasn’t even been a month
Who says innovation doesn’t pay off? Tesla Motors says worldwide orders for its new lower-priced Model 3 electric car have hit 325,000 and rising. The Palo Alto, California, company started taking orders March 31, shortly before Musk unveiled the car in Los Angeles. It’s not even scheduled to go on sale until late next year. Telsa’s stocks are projected to soar this year if they meet this demand of pre-orders.
It just goes to show you what being a visionary can lead to: CEO Elon Musk had an alternative idea to standard auto manufacturing and how dealerships work, and despite endless government roadblocks, hits this tremendous number. It’s not all roses and chocolate but sometimes you have to take a risk and roll the dice.
What’s in a name?
Let’s look a little closer at the Telsa phenomenon. Telsa’s detractor’s will try and pull away the silk veneer and say T’s success is all smoke and mirrors. I’m not one of them although I wish Telsa would work contrary to its present business model. More on that later.
First though, I won’t argue that the number of orders only reflect fully refundable pre-orders on the Model 3 that required a deposit (of $1,000). And, according to a recent Stratechery article, Tesla has a history of delivering cars late and with a higher price than expected. More importantly Tesla only control’s a fraction of the car market.
I say “phooey” to all that. Give me another car manufacturer that can generate those kinds of numbers on pre-orders for a car sight-unseen. Slice it up any way you want and Telsa still has created a brand that generates a lot of heat.
The vision
Telsa CEO is nothing if not forward thinking. Maybe the term visionary is bandied about too easily these days but it is what it is. Stratechery points out that the strategy of Tesla is to “Enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.” Additionally Telsa looks to “Reinvest all free cash flow into R&D to drive down the costs and bring the follow on products to market as fast as possible.” So in theory at least, when someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car.
The thing is, and I alluded to this earlier, is the word Telsa means something to people.
Whether that means sustainability and caring for the environment, or amazing performance or even Silicon Valley status symbol, Tesla’s focus on the high end has, according to industry analysts, helped the company move down the cost curve.
Ultimately I’d like to think it was Musk’s insistence on making “An electric car without compromises” that ultimately led to nearly 300,000 individuals reserving a Telsa Model 3, many without even seeing the car.
Those things you do
A part of me wishes that Telsa had come out with a price-friendly eco car first and then elaborated on a premium model. But I can see that kind of thinking would not have made the company into the player it is today.
Bottom line: You may have an alternative model, and it may not be easy, but it IS possible to succeed by going against the grain.
Heck, just ask Elon Musk.
