On Thursday, Tesla Motors fulfilled a long-made promise by holding events worldwide to take reservations on the Tesla Model 3. While we’ve grown accustomed to Tesla Motors promised deliveries slipping beyond promised deadlines, the company has long promised that in March 2016 we’d be able to place a deposit on the Model 3. And, good to their word, on March 31, we were able to do so, with many thousands (going by social media chatter) of people making reservations even before the unveiling event due to occur this evening. Sight-unseen, not knowing the specifications or anything else other than a promised $35,000 MSRP and a 200 mile electric range, thousands of people queued in long lines at Tesla stores around the world to put down a deposit on a car they won’t receive for 2 years.
Over two hundred people lined up in the rain in Montreal Canada. A line in an undisclosed location in California was over 2 blocks long. In Austin Texas, over four hundred people. A hundred people in Gothenburg. Another long line in Oak Brook Illinois. And, even though Dallas is Oil Country, there was a long line. The SF Bay Area was well covered with a few hundred at the Stanford Shopping Center, a few hundred more in Sunnyvale CA, over 400 in Burlingame CA, 400 or so came to a Tesla facility in Fremont, and at Santana Row (San Jose CA) they had “the longest line ever”. In an unnamed Mall, the line was long enough to wrap all the way around. Portland Oregon, unsurprisingly, had a long line. Over 400 in San Diego. As did Charlotte North Carolina. Some equated it to an iPhone launch. There’s plenty more social media posts like this, such as a report seen on Facebook of over 900 people in line in Scottsdale Arizona.
In a tweet, Tesla Motors CEO Elon Musk wrote: Incredibly inspired by the interest in Model 3. You won’t be disappointed. Also, small token of appreciation coming for those who lined up. Musk personally went to the event in Century City to meet with and high-five with people in the line.
The Motley Fool observed the long lines are “no joke” and that it indicates the Tesla Model 3 will sell strongly, once it’s available. On the other hand, the Daily Beast suggests the hype over the Model 3 might erode Model S and Model X sales and might kill Tesla Motors. This would be a version of the Osbourne Effect, named after Osbourne Computers which folded after unveiling a fantastic new computer, much better than their current model, leading customers wait for the better model, and killing their sales.
Tesla Motors has been burning cash at a prodigious rate. The company is doing so to build production capacity, both for manufacturing the Model X, to build the Gigafactory, and to eventually start Model 3 production in late 2017. All that is an expensive investment in factories and machines and people, that will possibly pay off when the cars are available for purchase.
Most are discounting this theory, that the huge interest in the Model 3 will harm Tesla Motors. For example, the Model S and Model X sell in a different market segment, the 5-series and 7-series luxury cars, than the Model 3, which will sell against 3-series luxury cars. Tesla’s existing cars have taken a significant market position in that market segment. It’s not like Model S buyers didn’t know about the Model 3. The company has talked about the Model 3 in general terms for several years now, dating back to Tesla’s early days when Elon Musk revealed the company’s secret business plan.
As the writers at Teslarati asked, “Who’s ever lined up worldwide to get a car they’ve never seen?” That should be asked a different way. When was there ever thousands of people lining up, worldwide, to place a big deposit on a car they hadn’t yet seen and they wouldn’t buy for over 2 years? When did anyone ever camp out for multiple nights to be first in line to put a deposit on a car?