The car industry has never witnessed what Tesla is about to go through
Most of the best selling cars in America, such as the Honda Accord or Nissan Altima, generally hit around 300,000 in sales every year.
Tesla saw 276,000 people sign-up to buy its newest all-electric Model 3 sedan — in two days.
That massive number, which far exceeded optimistic forecasts, upends traditional thinking about how to sell cars and is expected to spur the auto industry to shift more dramatically to market electric technology to consumers, analysts said.
“We’ve never seen anything quite like this in the auto industry,” said Jessica Caldwell, a senior analyst at Edmunds.com. “It is unprecedented.”
Mainstream car manufacturers have long dabbled in electric technology and some have made a bit of headway in getting such vehicles on the road. But the category was a niche, measured in thousands — not hundreds of thousands — of cars sold.
Tesla now appears to be doing what no other has so far been able to accomplish — sell electric cars to big crowds.
The company has received nearly as many Model 3 reservations in the past several days as some automakers produce in a single year. Mazda sold 319,000 vehicles in the United States in 2015, according Caldwell. Lexus sold 344,000.
Even if some pre-orders for the $35,000 Model 3 are cancelled — or if Tesla struggles to meet such demand, which many analysts say is likely — the company has shown that consumer appetite for a well-designed car can be robust, even if it is purely electric, said James McQuivey, an auto analyst at Forrester.
“It’s a watershed moment for rethinking vehicles all together. Tesla is putting together the idea a vehicle needs to be cutting edge and cool, more like an iPhone than like a Model T,” McQuivey said. “It’s changing what we mean when we buy a car and what it says about us.”
He added: “Years from now we’ll look back and say Tesla started an electric vehicle revolution. But that’s not because the people buying Tesla thought of it as an electric vehicle revolution.”
Some of the additional comfort consumers may now have with electric technology is due to advancements in the batteries as well as the public infrastructure, analysts said. Drivers generally no longer need to fear running out of juice on the road, stranded without a power outlet. The Model 3, for instance, has a range of 215 miles, similar to that of a rival from General Motors, called the Chevy Bolt, which is priced in the low $30,000s.
And the number of publicly stationed superchargers — which can recharge a battery in a matter of minutes rather than hours — will double to 7,200 by the end of next year, Tesla said. The company also expects its network of car chargers to grow to roughly 20,000 locations by the same time.
Of course, some of the intense demand for the Model 3 may simply be the fruits of Tesla’s public-relations strategy, which centers on its charismatic chief executive, Elon Musk. Interest in his newest creation was helped by the critically acclaimed reviews of the company’s more expensive models as well as flashy presentations that featured his cars’ cutting-edge tech, such as the ability to summon the car, with no one inside, through a smartphone app.
“The Model 3’s huge reservation list should serve as a big wake-up call for the rest of the industry,” said Kelley Blue Book analyst Tony Lim. “Tesla just did a lot of heavy lifting to attract attention to the EV segment. Now is the time for competitive manufacturers to begin leveraging this momentum that Tesla created and building awareness to their fully electric vehicles that have comparable performance and appeal.”
The surge in orders is all the more impressive because most people will be paying an average of $42,000 for the Model 3, Musk said. The $35,000 model is a stripped down version.
By comparison, most of the best selling sedans in the country generally cost $25,000 or less.
Indeed, tens of thousands of customers lined up outside Tesla’s stores to order the car last week, with some camping out in tents to make sure they were among the first to put down their $1,000 deposits — even though Model 3 is not expected to be delivered until the end of next year.
“In regards to the recent news, we’re certainly pleased to see such strong demand for affordable long range EVs,” said GM spokesman Fred Ligouri. “We trust that the initial interest from consumers will continue when the Bolt begins production later this year.”
After the company announced its latest pre-order number on Monday, shares of Tesla jumped about 4 percent in regular trading.
Yet significant doubts linger over whether Tesla can ever manufacture that many cars. “Definitely going to need to rethink production planning,” a giddy Musk tweeted Friday when orders for the Model 3 had hit a mere 198,000. Tesla has never delivered more than 5,850 cars in a month, according to estimates by Inside EVs. And it has experienced delays in delivering its SUV, the Model X.
Tesla on Monday said that its “hubris in adding far too much new technology,” the lack of oversight over its suppliers, and not having enough internal capacity led to a shortage of parts for the Model X.
But Musk has expressed confidence in being able to meet demand for the Model 3, noting last week that Tesla’s Fremont, Calif., factory had produced 500,000 cars per year — albeit under a different owner.
Originally published at: https://www.washingtonpost.com/news/innovations/wp/2016/04/04/the-car-industry-has-never-witnessed-what-tesla-is-about-to-go-through/