Tesla Inc Model 3 Could Start Killing Model S SalesAuthor: Mvusi NgubaneLast Updated: April 20, 2020 The Model 3 from Tesla Inc came out last week and reviews are already praising the affordable EV. From the looks of things, you would have a hard time finding a report relaying anything other than utter amazement for the car. There are a few concerns though. Investors are pressed to pay careful attention to the effects the Model 3 might have on Tesla’s more established vehicles. Could the affordable Model 3 hinder the sales of the premium Tesla lineup?One analyst put a research survey in motion to answer that question. It was directed at current Tesla owners. According to the findings, there are reasons to worry about the newly released EV digging into the sales of Tesla’s high-end vehicles. So, what does the survey reveal?As it turns out, Elon Musk’s auto business is great at retaining its buyer base. Yet the chance of Model S and Model X drivers renewing their Teslas with another premium Tesla are slimmer now. That is, now that the Model 3 is here.Over 30 percent of the surveyed existing Tesla Inc buyer base reserved a Model 3. This is in according to a note by Toni Sacconaghi, an analyst at Bernstein. Most of those reservation holders, about 70 percent, are probably going to follow through with their pre-orders.The Model 3 eating away and premium Tesla sales is “clearly a risk”, says Sacconaghi. The analyst points out that almost one-third of the young automaker’s existing buyer base has plans to get the new Model 3. This says a lot about the allure of the new EV and Tesla’s capacity to retain existing buyers. However, the new car will to some degree “cannibalize the sales of higher-end Tesla models”.There is something else the research points out, further indicators of the affordable Tesla chipping away at Model S and Model X sales. Sacconaghi highlights Tesla’s car inventory and how it has risen in recent months. At the same time, though, data shows that S and X deposits have lowered significantly.This shows that demand for the premium cars slipped somewhat in the months building up to the new car. The suggestion is that the Model 3’s affordability has many EV drivers considering the cheaper car over the more premium Teslas.Sacconaghi’s note went on to reiterate what most people already know: Tesla owners live the dream. The analyst’s survey points out that 84 percent of those surveyed claim to love their car. It’s the best car they’ve ever got their hands on too, according to 84 percent of those surveyed.Model 3 the new Tesla flagship?However, this does not mean Tesla owners would prefer paying a fortune for their cars, especially now that a spectacular-looking Model 3 has come along. The car offers owners the chance to continue owning a great EV built by a great automaker, only at a discount. With a proposition like that, it is likely that premium Tesla owners might opt for the Model 3.This is more likely for Model S owners. While the Tesla Inc Model 3 is admittedly a lesser car than the premium sedan, the upsides of going full Model S are considerably smaller now. Anyone looking to get a Tesla Model S has a starting price at just above $70,000. That’s more than double the Model 3’s $35,000 opening price tag.The thing is though, Tesla Inc said buyers can get an estimated 310-mile range Model 3 for $9,000 more. The entry level 75D rear-drive Model S costs more than that yet still offers 249 miles on a full charge. How many buyers looking for a Tesla sedan are willing to fork out more cash for less range? The advantage held by the Model 3 is evident.About 83 percent of those surveyed said they are likely to buy another Tesla as their next car. The Model 3, with all its affordability and range might be their next choice. At it stands, Tesla Inc has over half a million Model 3s to build. The queue might be deterring right now. However, once Tesla scales up production and is pushing out over 500,000 cars per year, the affordable EV will only look that much more of a convenient buy.All part of thee Tesla Inc plan?Tesla’s sustainability lies with its newest car and future releases like it. The Model S is its flagship right now, but it won’t be for very long. That is not due to cars like the S or X failing. Instead, pushing electric vehicles to wealthy experimental types is clearly slow business. Tesla has a decade and a half under its belt and is yet offer any considerable profits.The Model 3, on the other hand, sells much faster. With an entry price of $35,000 and tax discounts on top of that, the car secured over 100,000 confirmed pre-orders in the hours building up to its unveiling.Market watchers guess its true number of reservation holders to be over 550,000 at the moment. The car’s response is so overwhelming in fact that Tesla admits to anti-selling it. Instead, customers looking to get in line for the Model 3 right now are encouraged to get a Model S.If anything, this is proof of the vast fan base that cars like the Model S and Model X build. Safe to say, they have certainly done their job. Now it is time for affordable Teslas to step in. They come as a chance for Tesla Inc lovers with lower incomes to get a luxurious Tesla of their own. And that’s where the profits lie.