Home Technology Tesla Motors Prepares For The Model 3 Circus

Tesla Motors Prepares For The Model 3 Circus

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Tesla Motors is set to unveil the Model 3 tomorrow, although there’s debate about how many details about the car will be revealed. Analysts in general aren’t expecting a lot of new information about the mass market electric car, and most are looking forward to information about early demand in the form of preorder numbers.

More than one firm has drawn a comparison between tomorrow’s Model 3 event and Apple’s annual iPhone launches—a comparison that really isn’t out of the ordinary as Tesla’s premium brand image has been often compared to Apple’s in the past.

An “iPhone moment” for Tesla

In a report dated March 30, Deutsche Bank analyst Rod Lache and team explained that tomorrow brings not only the Model 3 reveal but also the opening of preorders for the car at Tesla’s stores. Preorders open at 10 a.m. Eastern, although interestingly, preorders open in Australia before they do in the U.S. because Australia’s vastly different time zone means March 31 begins there first. Because the Model 3 event is scheduled for 8:30 p.m. Pacific (11:30 p.m. Eastern), it’s likely that management will already have the first preorder numbers.

Whether they will reveal those numbers at the event, however, remains to be seen. Online reservations begin the following day.

Lining up for Tesla’s Model 3

Already a line is starting at some Tesla stores as some electric car fanatics want to be the first to reserve a Model 3, which is probably why Lache is calling tomorrow’s event “Tesla’s iPhone moment.” The car’s price is expected to start at $35,000, although the average order size could be much larger. Because it will be the automaker’s first mass market car, it’s expected to be the main contributor to the 500,000 units Tesla management is projecting for 2020.

The DB team said they wouldn’t be surprised to see preorders of around 100,000 for the Model 3 just in the U.S. alone, citing “the enthusiastic commentary” from current Tesla owners and people who intend to purchase one and also positive feedback from the automaker’s 88 U.S. stores. Lache and team think that each of those stores could easily take more than 1,000 preorders for the electric car as even more consumers are expected to camp out to be among the first to preorder one.

Keep in mind that the Model 3 isn’t expected to be released for nearly two years, so such significant interest right from the beginning of preorders would be unprecedented, they note.

Tesla’s dilemmas with the Model 3

Barclays analyst Brian Johnson sees a number of problems Tesla will have to overcome on its path to become a mass market automaker. He said the biggest debate is about “how ambitious” the automaker will be with the Model 3. For example, he said if it is less ambitious, ramping production would be easier, but it could encounter more problems differentiating the car at the lower price point. However, he thinks Tesla will go the more ambitious route, adding that the company faces major barriers to success in terms of production volumes.

Like Lache, Johnson notes that there’s been a lot of buzz around tomorrow’s event, which he describes as a “‘Black Friday’ atmosphere.” He also sees 100,000 reservations as being “very achievable,” setting a time frame of the first quarter to achieve this target.

Credit Suisse analyst Dan Galves and team sees the 100,000 preorder target as coming earlier, possibly within “the first several weeks,” although he notes that we’ll get a better idea about demand through enthusiasm expressed on online forums.

Tesla shares were down 1.29% at $227.15 within minutes of closing bell on Wednesday.

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