Tesla has apparently started educating employees about the Model 3 and the differences between it and the Model S. The Model 3 is slated to enter production in July, so the automaker is preparing its employees for the launch. Most agree that the mass market EV is everything right now when it comes to Tesla, so the company has got to be prepared.
But is Tesla really prepared to deal with mass market customers rather than luxury car buyers who are early adopters and thus more forgiving of its shortcomings? One analyst’s experience suggests it might not be.
Comparing Tesla Model 3 to Model S
Model 3 Owners Club founder Trevor shared what he says is an internal document given to Tesla employees so that they have some talking points on the Model 3. He posted the document on his club’s forum where it was spotted by Teslarati, adding that it can’t be found on the company’s website because it’s “‘talking points’ given to all Tesla employees.” The idea behind it appears to be a quick snapshot for employees to be able to highlight the differences between the Model 3 and the Model S when talking to customers.
For example, the document states that the Model 3 can go from 0 to 60 miles per hour in 5.6 seconds. The 85kWh Model S reaches 60 miles per hour in 5.4 seconds, so Tesla’s first mass market car is nearly as fast as its flagship model. The 100kWh Model S with Ludicrous Mode can reach 60mph in only 2.3 seconds.
A plan to battle Model S cannibalization?
The document also gives a more concrete idea of how much smaller the company’s next car is compared to the Model S. The Model 3’s trunk measures 14 cubic feet, compared to the 30 cubic feet of trunk space in the Model S. And while the S has a power lift gate, the 3 will have a manual trunk. The Model S fits five adults and two children, while the Model 3 only fits five adults. Additionally, the S has two digital displays, while the 3 has only one, and the S has more than 1,500 different configurations to the 3’s more than 100. The S is able to go 249 to 335 miles on a full charge, while the 3 can go at least 215 miles.
It seems Tesla may have a plan to battle cannibalization in the early days of the Model 3, a concern many analysts have been planning to keep an eye on. The document posted on the club forum shows that the Model S has a wait time of “30 days or less,” while the Model 3’s wait time is “1 year +.” In fact, it even goes so far as to say that orders placed for a Model 3 today shouldn’t be expected to be delivered until the middle of next year.
Will customers wait for a Model 3?
Bernstein analyst Toni Sacconaghi, Jr., who has a $250 price target and Market-Perform rating on Tesla stock, warned in a note to investors dated May 19 that the lengthy wait time could end up being a problem. He and his family ordered a Model X in July 2014 and only just received it in July 2016. He offered up his experiences in dealing with Tesla, starting with the initial order through now, and overall, it doesn’t sound like it was an excellent experience.
So far, many Tesla owners seem to have been very forgiving, especially where issues like Autopilot are concerned, so the company has been able to get by despite the growing pains that come with being a startup. However, one of Sacconaghi’s key points was that Model 3 buyers are much different than Model X or S buyers. He noted that the lack of visibility in terms of delivery time could be a big problem for those interested in the mass market EV.
Timing will be everything for Model 3 buyers
One of the issues has to do with the U.S. federal tax credit on EV purchases, which is due to be phased out over time. It means those who ordered early will probably get the full tax credit, but those who order later may get no credit or only part of the credit. Given that Tesla received 180,000 preorders for the Model 3 in the first 24 hours, there’s no way for those who ordered one to know how far up the list they might be.
Sacconaghi also warned that Model 3 buyers may not be as tolerant of problems in the order process, as the average Model S and Model X owner earns more than $270,000 a year, while only 37% of Model 3 buyers earn more than $100,000 a year, making them much more conscious of things like the tax credit.
Shares of Tesla stock ticked lower by as much as 0.27% to $309.99 during regular trading hours on Monday.