Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk has created a company that is a PR magnet. Next to Donald Trump, Tesla gets more free news coverage than anything or anyone in the world today. Why are we so interested in a company that until now has created cars that are so expensive that only the wealthiest car buyers can afford to own one? Because for a variety of reasons, most of us would like to own one. It’s that simple.
Tonight, at 8:30pm PST, Elon Musk will tell us all about the much anticipated and arguably over-covered, Tesla Model 3. At that time, those interested in placing a $1000 deposit on the car can do so online. Even before the event begins, at 10:00am local time, those who are brave enough to make a deposit sight unseen, may do so.
So, exactly what kind of people are willing to stand in line outside of Tesla store to make a deposit on a car they’ve never seen? And who are the people who will be frantically hitting their browsers refresh buttons tonight as they wait to place their reservations?
Here are 4 types of people we think will be placing deposits on the Tesla Model 3 today.
To see a list of high yielding CDs go here.
Current Tesla owners
Many of those that will be lining up in front of Tesla Motors (NASDAQ:TSLA) stores are current owners of the Roadster, Model S, or Model X. To current owners, the Model 3 might be a cheaper alternative (maybe daily driver) on occasions when they don’t want to “stress” the more expensive Model S and Model X. Some current owners might also choose to buy the Model 3 for their kids or significant others.
We cannot afford the mistake of lumping current Tesla owners in the same category as first time buyers of Tesla’s cars or EVs. To start with, most of folks that bought the Model S were shopping for luxury class autos. At the end of 2014, Edmunds.com revealed that almost 84% of people buying the Model S were men. More so, more than 50% of those buyers were between 45 and 64 years old and 75% of them have annual earnings above $100,000.
The Model 3 will attract Value Buyers
The largest set of people that will be lining up to buy the Model 3 are value-conscious buyers who want the best bang for their buck. Tesla’s master plan has the firm starting out with premium luxury cars, a move towards the mid-range market, and a final push into the mass-market with an affordable EV for the masses.
Tesla has played to the script of its master plan with the Roadster, Model S, and Model X – the Model 3 is the starting point in the final phase of Tesla’s plan to dominate the auto industry. Interestingly, the Model 3 priced at $35,000 should be an instant hit in the market. The fact that many of its buyers will qualify for a $7,500 federal tax cut and additional state tax credits means that the car will sell at a much cheaper price than the rival Chevy Bolt from General Motors.
Tesla won’t need to do much talking before selling the Model 3 – the car should practically sell itself because of the benefits of EVs over ICEs. The Model 3 is cheap and EVs has lower maintenance costs because they don’t need any trip to the gas station. Buyers don’t have to worry about oil changes, air filters, and brake pads (regenerative braking at work). Tesla also sends out over-the-air updates with improves the performance of the car without the need to drive into an auto shop for a tune-up.