The Tesla Model 3 is finally here. It ships in August and costs $35,000. Only it doesnt, and it doesnt.
Tesla didn’t exactly lie to us outright. The company kept its promises, but it has also masterfully obfuscated the fact that you can’t really go out and buy a $35,000 Tesla right now, or even soon. I can’t even get mad at Tesla for pulling it off, either: The staggered, two-part launch was a masterful class of marketing and deception.
The details on why the true cost of a Tesla Model 3 is higher than advertised have been widely covered, so here’s the short version: The $35,000 version of the car is pretty bare and does not have Autopilot, which is an incredibly important feature for a car thats been described by the company as self-driving-ready. This means that customers will have to dish out at least $5,000 more to get what they were promised, an additional $3,000 more to get full self-driving capabilities once theyre available, and $9,000 on top of that to get a better range and a nicer interior. Plus, there’s a $1500 cost to install the home charger.
And yes, the car is technically shipping in August, but not the $35,000 version. To get that one, even a Tesla buyer that happened to reserve her Model 3 really early will have to wait until November or December.
The $49,000 Model 3 that is shipping in August is shipping in tiny quantities about 100 cars according to Musk and only to Tesla employees. The first shipments of that version to customers outside of Tesla will happen, per Teslas FAQ, in late October.
Put all those together and youll realize that for the vast majority of buyers, the Model 3 will cost more than they thought it would and come later than promised (the car was originally slated for production start in July 2017, though Musk did admit, at the time of announcement, that this was unrealistic).
But the way the company handled the price hike and the slow production ramp-up was nothing short of brilliant. It sure as hell beat Musk coming on that stage and saying sorry, the Model 3 you want will cost a bit more than $35,000 and it wont be done on time.
It all goes back to those crazy reservations. A year ago, Tesla leveraged the insane amount of good faith it gets from buyers and fans and did something highly unusual for the automotive industry: It asked people to pay a $1,000 in advance to reserve their Model 3. Half a million people did exactly that, without knowing nearly anything about the car except that $35,000 price floor and the fact that it will be electric and fast. Even the cars interior was a near complete unknown.
Musk juggled these unknowns masterfully. When the first photo of the interior was released, people were worried about the lack of a speedometer in front of the driver. Musk responded that “the more autonomous a car is, the less dash info you need,” comparing driving the Model 3 to being driven in a taxi. But he failed to mention that the features that enable that autonomy will cost $8,000 extra.
The more autonomous a car is, the less dash info you need. How often do you look at the instrument panel when being driven in a taxi?
Elon Musk (@elonmusk) March 24, 2017
It worked. The reservations kept flowing in, and besides the mountain of extra cash, customers gave Tesla the ability to micromanage the Model 3 launch. If you open a store on a certain date, you cant control who goes in and who buys things. But Tesla can trickle out the Model 3 slowly and carefully, almost in a controlled manner.
This, I reckon, is why the first Model 3 cars will go to employees, who probably wont publicly complain if anything goes wrong. Previous Tesla owners will also be prioritized; possibly because theyre also more likely to be friendly to the company in case of trouble. It’s almost a beta launch, one that coincides with the fact that Tesla simply cannot build Model 3 cars at volume yet.
I haven’t seen much backlash regarding the Model 3. People aren’t complaining about the expensive Autopilot and range upgrades. They’re not pissed that even with an early reservation, they can’t get the cheapest version before December. International users aren’t raging about not being able to get the car until the second half of 2018. How come?
Tesla can afford to make mistakes because the company is perceived as an incredibly innovative startup that’s fighting the stale, gas-guzzling car industry. But even more importantly, it has an unusually charismatic leader in Musk.
Since the first Model 3 event in 2016, Musk was smart enough or maybe it’s just in his nature to remain accessible, open, and sometime even vulnerable. Or, in a word, human. He was secretive about some Model 3 details but incredibly transparent about other things, things automakers don’t normally reveal. When have you heard the CEO of a car maker announcing that the production date for an upcoming model was impossible due to some suppliers likely being late? Or that the next six months will be “manufacturing hell“?
As a result, Tesla buyers won’t be angry if their Model 3 is a little late. Or even if they are, they’ll be angry with Musk, not at him. Damn those suppliers!
We’ll see if Tesla can overcome the potential manufacturing issues it faces in the next half a year or so. But the company is already winning, despite all the hurdles it’s facing. Musk has his own version of Steve Jobs legendary reality distortion field, and for as long as he can sustain it, buyers will keep lining up for an affordable electric car that’s not really that affordable.