The Tesla Moment: Tony Stark plays Al Gore
April 16, 2016
“Every living being is an engine geared to the wheelwork of the universe. Though seemingly affected only by its immediate surrounding, the sphere of external influence extends to infinite distance.”
– Nikola Tesla: Serbian American inventor
Elon Musk arrives, above, a minute in, and stages a stunning Tony Stark-as-Al Gore moment – at one of the most resoundlingly disruptive product launches ever.
After confirming 325,000 preorders for the $35,000, 215-mile-range Model 3 in a blog post last week (“The Week that Electric Vehicles Went Mainstream“), a Tesla Motors TSLA +1.04% executive this week is saying that number is now “approaching 400,000 people.” (Via electrek.)
Tesla vice president Diarmuid O’Connell, speaking in Amsterdam at the AVERE E-mobility Conference, said that the Model 3 is “the car the company was really set up to build.” He went on: “It has exceeded all of our expectations as far as the rate at which we received reservations. Something approaching 400,000 people have already put down up to $1,000 dollars to reserve this car,” he said (at the 5:00 minute mark, courtesy of Vincent Everts). “This is great for Tesla Motors. It gives us the confidence to make the investments we need to make in order to build this car,” he said.
Below, why the Tesla could be the new model T.
Elon Musk, Tesla Motors’ CEO and pitchman, planned to call Tesla’s first affordable electric vehicle the Model E. You know, alongside the Model S and Model X. And the Model Y was to come later. But Ford ruined this adolescent fun by suing Tesla over the use of the Model E name, so the name was changed to the rather unsexy “Model 3.”
But while the name may not be particularly sexy anymore, the car itself, revealed on March 31 for the first time, is indeed a sexy car. And it is sexy not only because of its curvaceous lines, but also because of its likely impact on the world and our environment.
This article will explore the implications of the Model 3 and how it fits in with national and international goals to reduce carbon emissions and wean ourselves from fossil fuels. The one-line conclusion: The Model 3 will likely go down in history as a product as important or even more important than Ford’s Model T, first offered in 1908.
Ford’s Model T was the first affordable automobile. It was a vehicle that came in just one color for most of its 20-year production run (black), and it had a top speed of about 45 miles per hour. But as unflashy as the Model T was by today’s standards, it was incredibly flashy in terms of its impact on our how we move people and goods, and on our culture more generally. It made cars ubiquitous, ending the age of horse-drawn carts and other premotorized forms of transportation, and at its sales height, it made up half of the car market in the U.S.
Musk’s Model 3 is not even in production yet, but it holds the realistic promise of becoming far and away the biggest-selling pure EV to date. The Model 3 already has over 325,000 preorders, requiring a $1,000 refundable deposit (I’m one of them; can’t wait to get my mitts on that spaceship steering wheel).
It seems very likely, considering that over 325,000 preorders occurred in the first week of the announcement, that preorders will break the 500,000 mark before production of the vehicle starts in late 2017 — and perhaps far more. Even at the current number of preorders, this will, if a reasonable number convert into sales, be the biggest product launch in history in terms of dollar value.
At 325,000 preorders, and an average cost of $42,000 per vehicle (Musk’s estimate for the average option level over the base $35,000 price), Tesla has the potential for sales exceeding $13.5 billion in just meeting preorders. At 500,000, this figure rises to $21 billion, which is about two-thirds of the current market capitalization for Tesla.
U.S. EV and PHEV sales in 2015 reached the key point of about 1 percent of total car sales. As I’ve described in recent columns, however, this is halfway to ubiquity in terms of the required doublings, under Kurzweil’s law of exponential returns. The law is mathematically true, but there’s nothing inevitable about the annual growth rates at issue and thus the time periods required for each doubling. EV and hybrid sales in the U.S. actually slowed in 2015, showing a negative rate of growth, which has alarmed me and many other EV advocates. Globally, however, EV sales have continued to grow.