Showbiz-style rollout and media hysteria, rah-rah reviews and long lines to book the latest Tesla Model 3. You have to wonder what took so long for a country — where it is famously said, “If you don’t look back at your car after you park it, you’ve bought the wrong car!” — to lose its head over a car. Maybe because there wasn’t anything like this before?
America is car heaven. The US has the highest number of motor vehicles in the world (both absolute, and per capita, if you leave out minor principalities like Monaco and Luxembourg). At 809 vehicles per 1,000 people, it’s a surprise toddlers aren’t driving (Tesla may fix that too; it is working on a lithium ion battery-powered toy car for children). Learning to drive and buying the first car (and making out in it, according to some) are rites of passage in American life.Nowhere in the world are cars so sought after, car companies so revered, and car salesmen so reviled.
Into this ritualistic world comes a brash young company that many have compared to Apple -both for the fetish its founders have for a fine finished product, and the hysteria they generate among fanboys (and some girls). Last week, as Tesla‘s South Africa-born founder Elon Musk unveiled the prototype of the company’s new product, Tesla 3 -still at least 18 months away from production — an assembly of whooping Tesla employees, owners, and cheerleaders (some media among them) erupted wildly in scenes reminiscent of the kind of celebration Apple’s Steve Jobs could drum up at product launches.
Like with Apple and Jobs, Tesla and its founder already have a dedicated fan base, albeit much smaller, considering Tesla’s products are as nifty as iPhones and iPads, but only about 200 times as expensive. But with the Tesla 3, a $35,000 base-price sedan that costs almost a third of what the existing line-up of Tesla Roadster, Tesla S, and Tesla X sell for, Musk is reaching for the middle-class Joe who is already ponying up the same price range for mid-sized SUVs and cars.It sounds like an unbelievable deal, even without all the bells and whistles that Tesla puts in its fully loaded car.
Just three things among many had car buffs — particularly environmentally conscious fans — rushing online and to showrooms to book the Model 3, plonking down a $1,000 refundable deposit. Musk’s promise that even the base model would have features common with its $100,000 top-of-line Tesla — an impressive battery range of 215 miles (344km) on a charge, the highest among current major electric vehicles, a capacious interior that can seat five people comfortably, and the great love of many Americans — acceleration and speed: Zero to 60 miles (about 100km) in six seconds. All for a sticker price of $35,000. Additional features could bump it up to $42,000.
Small wonder, some 200,000 people worldwide, including in Delhi, beat a path to Tesla showrooms (or the website) to put $200 million in Elon Musk’s pocket even before the first car has been produced. “Model 3 orders at 180,000 in 24 hours.Selling price w avg option mix prob $42k, so ~$7.5B in a day . Future of electric cars looking bright!” Musk tweeted triumphantly. Two hours later, he tweeted, “Now 232k orders.”
While financial mavens calculated that Tesla could do more than $2 billion in debt equity of fering with just the deposits he will be sitting on for at least two-three years, Musk himself indicated that if production is fully realized, it would generate more than $8 billion in cash flow for Tesla, putting the long-sought but frequently underperforming electric car in the sight of the average buyers spooked by its unreliable reputation, lack of charging options, and “range anxiety.” According to Musk, not only have all those issues been fixed, but the Tesla 3 will sweep every other car off the market.
But carrying through the promises is fraught with big ifs — and risks. Although previous Tesla models have received rave reviews for design and performance, there were inevitable delays even though volumes were low for those cars. Last year, Tesla delivered little more than 50,000 cars all three models combined. The 232,000-plus orders for Tesla 3, which could go up to 5,00,000 before the hysteria subsides, will test Tesla’s assembly lines, all located in the US. Musk maintains that with any new technology, “it takes multiple iterations and it takes economies of scale before you can make it great and affordable.” He thinks Tesla can begin delivering within the 18-month timeline it has promised.
Meanwhile, what of India, now fast taking after the US as automotive heaven despite its dismal infrastructure? In a country where the mantra has long been “kitna deti hai?” (how much mileage does it give?), 346km per charge could seem like mileage heaven. But as the joke goes, how will it work if there is no power? On a more serious note, Tesla’s India problem is poor roads and lack of charging stations. Besides, where in heavens can you accelerate from one to 100km per hour in six seconds?
That hasn’t stopped Indian enthusiasts from joining the worldwide hysteria and singing “tu cheez badi hai musk musk.” Prime Minister Narendra Modi may not have succeeded in persuading Musk to set up a manufacturing facility in India, but given the size of the auto market, Tesla is certainly beating a path to India’s door -with Musk all ready to do his version of Car Seva.