Electric Currents

Tesla Model 3: The Market Just Roared

Apr 05, 2016

As of Elon Musk's last tweet, Tesla had pre-orders for some 276,000 Model 3 electric sedans, but mine isn't one of them... yet.

When I launched EV World January 1, 1998, I fully expected that within a couple years, there would be multiple thousands of electric cars on the road, starting in California, but eventually spreading across the nation as other states who'd adopted the state's tough emissions rules, would follow Sacramento's lead, requiring increasing percentages of automobiles sold within their borders to be 'zero emission.'

Those were hopeful, halcyon days, especially for EV1 and EV+ drivers who extolled the virtues of their electric cars even if their effective driving range wasn't much over 60-80 miles on a charge. Back then, the public could lease electric models from GM, Honda, and Ford. Businesses and government entities could lease models from Toyota, Nissan and Chrysler. Given the California Air Resources Board's quota, maybe something like 5,000 electric cars in total hit the road between 1998 and 2000. Of course, lurking and working in the background were oil industry sappers and the car industry, itself looking to undermine the state's mandate, which largely succeeded by 2003-2004, leading to the infamous crushing of GM's wonderful little EV1 and the filming of 'Who Killed the Electric Car?"

Back then and even up to the present, opponents have argued that governments shouldn't be in the business of picking winners and losers, especially when it comes to technology. We should let the 'market speak.'

Well, this past weekend the market not only spoke, it ROARED!

Even before Elon Musk revealed the cars last Thursday night in Hawthorne, California, the company had taken 115,000 pre-orders! People stood in line for hours, some a couple days, to put down their names and hand the company $1000 to get on what will be a two year waiting list for the Model 3, Tesla's $35,000, five-seat, 215-mile range electric sedan. By the end of the weekend, the numbers had swollen to 276,000 pre-orders, worth, if everyone commits to buying the car, nearly $10 billion! And while the deposits are refundable, Tesla's bank account is now flush with more than three-quarters of a billion, all in just three days time!

Now there are lots of pundits out there fretting that Tesla can't pull this off. That they are a financial house of cards with quality control problems and shady accounting practices. I am not a financial analyst, I can barely keep my Quickbooks account up-to-date. Deciphering annual reports and 10K forms is as foreign to me as reading or caring about baseball stats. They point out problems with the gigafactory in Nevada and flaps over the falcon door on the Model X, some going so far as to speculate that the Model 3 will be the death knell of the company. In fact, there appears to be no end to the litany of challenges facing Musk and company, including high-level management defections.

None of this has phased "the market." I am guessing that when Musk tweets the seven day total of reservations for the Model 3 late Wednesday, they'll have at least a third-of-a-million orders in hand. That's what a I call "the market" at work: people are "voting" with their pocketbooks in extraordinary numbers for an expensive vehicle that, apart from the handful of prototypes, hasn't even been built yet; and something many of them will have to wait years before they can sign the paperwork.

At the moment, I am not one of them though my wife (the sober, practical one in the family) did ask me over the weekend, why I hadn't put in our order. Now, when she says that, and I am not entirely sure she wasn't halfway serious, you know there's been a sea change taking place, one that has very clearly become a global phenomenon. I came across a headline this morning to the effect that people aren't buying a "car," they are buying a "Tesla." There is now, despite the issues the company is having, an unmistakable cachet associated with owning the brand that once was reserved for the likes of Mercedes and Cadillac.

Yesterday someone asked me on social media (I now have 4,500+ followers on Twitter) if they should put in a pre-order or just wait to 2018 to see if the car will be available. I replied that with demand for the car exceeding even Musk's wildest dreams (he tweeted that he thought maybe 20-30 people would line up outside their showrooms to order the car, when in fact it was not uncommon to have hundreds in line), I really don't think it makes much difference now. Either way, it's going to be a long wait.

Besides, there are some fairly interesting other options coming down the pike, starting with the Chevy Bolt. Given the eye-opening success of the Model 3 launch, I am guessing there are frantic planning meetings going on in Japan, Germany and Detroit about how competitors are going to respond and take advantage of what is clearly turning out to be a revolution in motoring expectations: exactly what we'd hoped would have happened back in 1998.

Incidentally, Tesla stock went from $226.22 prior to the Model 3 reveal to trading today at $246 a share. My wife also asked me why we hadn't bought TSLA. My lame response was, as a journalist, I am under obligation to report if I own shares in any companies I write about.

"So?" was her response.

Incidentally, the wife's 401K has always done much better than mine. Maybe I should listen to her more often.

Hmmm, wonder if it'll come in green?

Tesla Model 3

Times Article Viewed: 4972

<< PREVIOUSNEXT >>
READER COMMENTS

blog comments powered by Disqus