How The Launch Event Resulted in 100,000 Orders in Just 1 Hour
Elon Musk, the chairperson, and CEO of Tesla unveiled the ‘affordable’ Model 3 electric car. Compared to the previous two models (Roadster and Model S/X), this is the most affordable and is priced at $35,000.
However, did the company compromise on features? It does not look so. Model 3 is obviously smaller compared to the previous models but still can comfortably seat five adults. The charge could withstand an incredible 215-mile journey. Even the base model comes with autopilot hardware and 5-star safety features. When Elon Musk described the features one after the other, the applause from the crowd became louder.
Though the first two models were expensive and had fewer buyers, they have created a huge fan following for Tesla. The consumer following was evident from the fact that the number of orders crossed 100,000 in just an hour after the unveil.
Topics related to this event were trending everywhere including Facebook and TV channels. How is this grand event going to impact Tesla, the automotive industry, and the share prices? Read on.
Can Slim Margin ‘$35000’ Model 3 Improve The Bottom Line Despite 2+ Competitors?
You already know that Tesla is not profitable yet in spite of steadily growing sale volumes and revenues.
Though profit margin per car may be slim, two factors can help the model 3 to become profitable.
- High demand (partly due to the lower price tag) will lead to increase in sales and hence revenues. In just about a month from the unveiling, the number of pre-orders crossed 300K.
- The company is intensifying its capability to produce around 500K cars per year by 2020.
The hopes associated with model 3 are not without challenges. There have been considerable delays in production and deliveries of previous high priced models. This time, the company has to do a lot to produce and deliver on time. Below are few steps in the right direction.
The company is investing a lot in capital expenditures to scale production. For example, the company is building the so-called ‘Gigafactory’ that is set to become the largest lithium ion battery producer in the globe.
How 2 Big Competitors Are Reacting To Model 3?
The reception of Model 3 could trigger extensive investments in EV technology by the competitors.
Fierce competition for Model 3 is unlikely as of today, but the future can be different. For example, one common drawback among almost all competitors today is the lack of range. For example, the range of Nissan Leaf just over 80 miles. Moreover, the range of Ford’s Focus Electric is just over 76 miles. Both these companies are investing heavily in long-range EVs to match the 200+ mile range of Model 3.
The deliveries of Model 3 start only by the end of 2017. This waiting time has given a room for the competitors to enhance their EV segment. This reason is a compelling case for Tesla to start deliveries on time.
Where Was The Share Price Heading 7 Days Since Launch?
The market responded cheerfully to the launch. The decisive rally of the stocks is evident from the price movement for seven days following the launch. On March 31, the price was $229.77. After six days, on April 6, the price rose by 15% to $265.42. On April 7, there was a slight 3% fall to $257.20.