The Tesla Model 3, the mass-market electrical vehicle that may completely change the automotive industry, is here–and people are excited.
Well, most people, anyway. There are more than a few customers who are also disappointed.
About 63,000 people have canceled preorders for the electric car over the course of the past year, as revealed earlier this week by Tesla CEO Elon Musk on the company’s quarterly earnings call. (The number of orders dropped from about 518,000 to 455,000, Musk said.)
So, how would the famed founder respond to this bad news?
As reported by Recode:
“Those cancellations occurred over the course of more than a year,” Musk said on the call. “I think [these numbers] are inconsequential. With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there’s no point. It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour and a half wait for hamburgers, do you really want to encourage more people to order more hamburgers?”
Love it. Who’s gonna argue with that logic?
The truth is, Musk probably isn’t too worried. The Model 3 continues to average 1,800 orders per day; so, the company should recover those canceled orders in just over a month.
But there’s a bit more to this story.
Why are people canceling?
Of course, the reasons are numerous. But Mashable’s Stan Schroeder recently shared some interesting details regarding the fine print in Tesla’s marketing for the new car, calling the launch “a masterful class of marketing and deception.”
According to Schroeder, the Model 3 has been widely advertised with a sticker price of $35,000, but this is a model that almost no one would want.
The $35,000 version of the car is pretty bare and does not have Autopilot, which is an incredibly important feature for a car that’s 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 they’re available, and $9,000 on top of that to get a better range and a nicer interior. Plus, there’s a $1,500 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.
“Put all those together and you’ll 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),” writes Schroeder.
Of course, anyone who’s ever shopped for a new car knows that that entry-level models are bare bones. Still, I can see why a longer wait time and higher cost could be a deal-breaker for some customers, especially since this is the very first version of the Model 3.
But it doesn’t change the fact that Tesla is moving forward, fast and furious. And Musk seems to be on course to bringing his master plan to fruition:
Regardless of your opinion on Musk, we’ve got to agree on at least one thing:
The guy knows how to work a room.
A room currently filled with a half million people, and thousands more piling in, every week.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.