Who Needs a Reality Check, Tesla or Its Model 3 Buyers?

While flying to Cape Canaveral, Florida, to oversee SpaceX business, Elon Musk did what any of us would do with a few hours of free time: He used Twitter to chat with his 7.94 million followers about the upcoming Tesla Model 3.

As it turns out, when Elon Musk starts firing off replies on Twitter, people notice. Among the 50 messages he fired off were valuable insights into the future of his young car company and the model that’s expected to take Tesla from a few (expensive) driveways and turn it into a mass-market player. Many of the tweets seemed designed around lowering consumer expectations for the Model 3, but considering the scope of Musk’s plan for Tesla’s near future, is he the one who needs his expectations managed?

This tweet in particular serves as an example of Musk trying to cool the hype surrounding the Model 3:

Okay, so the Model 3 is just like the Model S, but worse. In another tweet, he explained that the Model 3 isn’t a new “version” like an iPhone upgrading from 6 to 7, but is instead a different model, designed to be cheaper to make and to buy. Although he has promised a dual-motor, all-wheel-drive Model 3 is coming, it won’t be immediately available when the Model 3 starts rolling off the assembly line later this year. Instead, shoppers who put down a $1,000 deposit hoping for an all-wheel-drive sedan will have to either wait until 2018—or take a refund.

In order to keep production on schedule, Tesla is slowing its roll on how incredible the Model 3 will be. After all, it’s better to deliver a predictable (if lackluster) product than to underwhelm your first customers with something inferior to their expectations.

But does Elon Musk need to manage his own expectations? While speaking on a call with investors last month, Musk announced his plan to produce 10,000 cars per week by the end of 2018. As the math majors in the room have undoubtedly realized, this prediction means Tesla hopes to sell more than a half-million cars by the end of next year.

To put things into perspective, Tesla is currently selling about 50,000 cars per year with the Model S and Model X. To hit Musk’s goals, the company would need to either dramatically increase sales on two models priced near or above six figures, or sell 450,000 Model 3s. Considering the Toyota Camry—America’s best-selling car—moved fewer than 400,000 units in 2016, Elon Musk’s goals seem a bit lofty.

Is Elon Musk out of his mind, or will Tesla really sell a half-million cars per year?

-Matt Smith

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1 Comment

  1. Elon Musk is just being himself – an ambitious entrepreneur with lofty goals; for some, bordering with insanity, perhaps.
    It looks like the daring CEO bases his plans on the reservations the company have received for Model 3, which is close to 400,000 by now – a demand that even Elon himself didn’t expect. Also, the company claims that Model S and Model X demand grew globally. The Silicon Valley upstart also fulfilled it’s promise to deliver 80,000 to 90,000 new vehicles in 2016, with the exact number being 83,922. This result showed an increase of 64% from 2015. Tesla also plans to start building battery cells for the Model 3 in the second quarter of 2017 (which is right around the corner) at its Gigafactory, and promises to gradually reduce the individual cost of batteries.
    It seems, at least, that Elon Musk has a clear vision of not such distant future and full-on ambition backed up by numbers. Although, I personally want Tesla to succeed, still, 500,000.000 cars by the end of 2018 sounds like fantasy to me.

    Elena K.
    Corsia Logistics

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