The success of Tesla's Model 3 goes far beyond its affordability

April 6, 2016 by Chris Ebbert And Alexandre Rodrigues, Nottingham Trent University, The Conversation
Credit: Tesla

Tesla Motors has already established its electric cars as fast, well-sized and capable of competing with petrol cars in how far they can go without needing a recharge. Now, the US firm run by Elon Musk appears to have countered the final remaining negative perception of electric vehicles: price.

Following its April launch, Tesla's new Model 3 generated over 250,000 orders in just a few days, meaning it is likely to become the bestselling electric vehicle in the world. By comparison, the previous annual bestseller – the luxury Tesla Model S – sold just 50,000 units last year.

While the $35,000 (£25,000) minimum purchase price of the car may not sound particularly affordable to most people, many governments are offering to cut the price of with subsidies. Many people pay for their cars using monthly repayment plans, and the running costs of an electric car tend to be so low that a higher purchase price is easily offset by almost non-existent fuel costs and exemptions from vehicle emissions taxes.

But, as Apple did with smartphones and tablets, Tesla has successfully made expensive technology more affordable, not by inventing a cheaper device, but by creating enough demand to make cost-saving possible.

Design and technology

Tesla cars are beautifully designed vehicles with surprisingly good build quality and safety standards. They are sexy vehicles of respectable heft and head-spinning performance that can hold the interest of luxury car buyers and petrol heads alike. Competitors such as the Renault Zoe, Nissan Leaf or BMW i3 seem rather puny in comparison, thrown together gingerly as a token nod to changing times.

Teslas also have a stylistic maturity that is all the more surprising, considering the company seems to have materialised almost out of nowhere. They look like the product of a longstanding brand, not a relatively recent start-up. This is in stark contrast to the conservative, established auto makers that highlight their long histories and heritage.

On the technology side of things, Tesla has done more than any other manufacturer to tackle the issue of range anxiety – that is, the fear of running out of charge before completing your journey. Musk has been determined to use more advanced and more expensive lithium ion batteries, hoping to bring down their cost through mass production made possible by increased demand. This is a risk other manufacturers have not been willing to take and gives Tesla a definite advantage.

Tesla has also taken an alternative approach by developing the infrastructure to support its cars. Traditional firms have been relying on the public sector in one form or another to make public charging points available and build up the market. Tesla, however, has built its own network of rapid charging stations so its customers feel confident that they will be able to charge their cars on long trips.

Personal brand

But the company's success has come not only from a product that's design and technology stands out from the competition, but because Musk has built a personal following through well-modulated PR efforts and visionary promises, much as Steve Jobs used to do. This has brought him more public attention and sympathy than the parallel efforts of established car makers, and of other companies currently trying to enter the electric vehicle game such as Google or Apple.

In fact, this approach seems to have elevated Tesla to a status above "car maker" in the public eye. It is now the car company that's trying to save the world, complete with a figurehead who's been compared to a superhero. Musk's status as the face of the company makes the company easier to like than the anonymous, corporate behemoths seen to be fiddling about with cables in mysterious seclusion.

So far, Tesla's success in the electric vehicle market is unparalleled. Its initial order numbers for the Model 3 were the equivalent of a single car factory's annual output capacity. If it wants to keep its customers happy, however, the firm will certainly need to continue expanding its charging network.

But if it helps to reduce the fear of running out of juice, the company may also find itself tailgated by the competitors that Elon Musk has so consistently mocked. We'll have to see whether Musk remains visionary enough to find new pathways to stay ahead then.

Explore further: Orders for lower-price Tesla reach 276,000 (Update)

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8 comments

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Eikka
2.3 / 5 (3) Apr 06, 2016
Let's see the product come out first before calling it a success.

Model X was supposed to be $60k but it ended up at $100k. If this goes the same way, Model 3 will be $60k and practically nothing will change.
gkam
1.4 / 5 (9) Apr 06, 2016
Too late to gripe. Musk changed the world, seeing all the pieces were there from decades of research and development.

When you finally change from your smelly and noisy diesel, you will love it.
Edenlegaia
5 / 5 (2) Apr 06, 2016
When you finally change from your smelly and noisy diesel, you will love it.


When those without funds to buy those cars will finally be able to change from their smelly and noisy diesels to that without selling their kidneys, they will love it.
Unless it finally happens, i'll keep my smelly, noisy diesel and let those who can proudly mock the poor drivers buy those cars, save the world, and feed the electric cars industry. I won't deny it needs that.
gkam
1.6 / 5 (7) Apr 06, 2016
"Those cars" will be the same price as the others soon. When you "poor" finally have to buy another car, it will be an EV because of the upkeep and fuel costs.

I am not mocking anybody but the few snipers. I am celebrating that, after all these years, it has been done, and your cars will be much cheaper and better than mine now.

As I said, I had to cash in some savings to do it, and live on SS, so we want to keep the monthly expenses down.
KBK
1 / 5 (1) Apr 06, 2016
The customers of Tesla, are sending a message to the corporate controllers of industry, politics, and finance in the USA, a message that they are fed up. Completely fed up, beyond fed up. Livid, in fact. Way, way beyond angry.

The message is: "Go Fuck Yourself. Die..Just...Die."

That is the real core of what is going on, here.
edshort4
5 / 5 (1) Apr 07, 2016
Elon Musk has the facts to backup the idea that he is an amazing entrepreneur. Musk made about $20 million from the sale of his online bank (kinda the first successful true online bank).
Then Musk made about $184 million from the sale of PayPal.
Then Mush started SpaceX, for the purpose of sending people Mars. Supply the ISStation, and launching communications satellites, is just a way to pay the bills along the way. Key ideas for SpaceX to succeed are (A) make all your own components so you can design them to be much cheaper than NASA - many amazing successes in this area, and (B) stop throwing away expensive rockets after one use.
As his $184 million fortune was being dented by SpaceX, Musk latched on to the Tesla effort - Mush always loved solar and electric energy. But not two major drains on his fortune.
Eventually Musk's fortune dwindled to a tiny $400,000! Clever late hour strategies enabled his companies to make payroll, and eventually their stock values rebounded!
Benni
3.7 / 5 (3) Apr 12, 2016
Too late to gripe. Musk changed the world, seeing all the pieces were there from decades of research and development.

When you finally change from your smelly and noisy diesel, you will love it.


How would you like to bet that Musk knows how to do Differential Equations.
gkam
1 / 5 (5) Apr 12, 2016
Probably not. It is easy to buy that.

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