Tesla Model 3 "A Game Changer"

It’s been described as “the fastest growing customer order book in the history of the automobile” and a “game changer” in the transition from the internal combustion engine to electric. Advance orders for Tesla’s Model 3, Tesla’s first affordable electric vehicle, soared past the 325,000 mark just days after release, representing a potential $US280 million and more in deposits alone to the Californian carmaker. If those orders all come to fruition total orders will equal $A13 billion in sales.

Analysts who have been sceptical of Tesla’s relatively modest sales performance to date might now be having to think again. Those numbers are more than the monthly sales of General Motors.

For Barclays analyst Brian Johnston the message is clear:

"We've seen more than our fair share of headlines on how the Model 3 is a game changer, with the EV revolution imminent. Adios gas-powered cars, " Johnston said.

He’s not alone in seeing the unprecedented demand for the Tesla Model 3, which won’t even be available until late next year, as an indicator of huge pent up demand for electric vehicles.

"Tesla has changed the game again," said Andrea James, an analyst with Dougherty & Co.

"In one day, Tesla generated at least 150,000+ reservations, representing an order book of $US6 billion in revenue, and generating $US150 million in zero-cost capital from the $US1000 customer deposits," she said.

Long wait for delivery

The challenge for Tesla is to turn all those orders into reality quickly enough to satisfy demand. On-time delivery hasn’t been its strong suit, with customers for its Model X experiencing a long, long wait for their cars, as the time line below shows.


Tesla may be leading the pack in electric vehicles, but it’s far from alone, with many other carmakers, including VW, Nissan, BMW and GM pushing to extend their range and reduce their cost. China has massive air pollution problems across its cities and is keen to see a dramatic increase in electric vehicles, a move almost guaranteed to drive down their price. Already Chinese manufacturer Byd has sold more electric cars and hybrids than any other company world-wide. In China it tripled its sales of electric vehicles in 2015. The governments of India and Norway have said that they want to all cars to be electric within 20 years.

No traditional dealerships

Tesla’s disruption to the automotive industry doesn’t just end with its innovative cars. It’s completely done away with traditional franchised dealerships in favour of owning its own showrooms where people can view the cars, put in and order, then wait for delivery. The company is keen to maintain control of distributions and repairs.

Time will tell whether the innovative Californian carmaker will stay ahead of the big pack of traditional carmakers that are now snapping at its heels.

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