Last Thrusday night was one of the most anticipated keynote events in the recent history of the technology world. Except it wasn’t a ‘keynote”. In fact it wasn’t even truly in the technology space. Of course, I’m talking about none other than the Tesla Model 3 unveiling. It was streamed live and for those who watched (or even followed the news afterwards), it was quite the sight to behold. Perhaps it wasn’t as flashy as some keynote addresses, nor was the presenter the world’s best showman (he was obviously a bit nervous; I don’t envy him). It was, however, amazingly impressive for (if nothing else) a single one hundred million dollar reason.
Let’s do a quick checklist on what we knew about the Model 3 in the minutes leading up to the release:
- No pictures — Check
- No details on range — Check
- No firm pricing — Check
- No knowledge of options — Check
- No specs — Check
- Basically no solid information of any kind — Check
Elon said that the reservations for the Model 3, which had been open for less than 24 hours, had already exceeded 115,000. At each reservation of $1,000 — that comes out to over ONE HUNDRED MILLION DOLLARS for a car (new product) completely sight unseen. That is, dare I say, unheard of.
Elon Musk is a funny and brave man.
Of course, skeptics will be quick to point out that the reservation is fully refundable. They are, of course, not wrong. However, Tesla is accepting credit cards on this reservation which means that unless the money is refunded in less than 30 days — Tesla will be taking a ~3% hit. Most importantly the Model X reservation bailouts have been holding around 3-4%. If even 90% of the Model 3 orders stay true till the end, Tesla will be a happy camper. It’s safe to assume that every dollar of that reservation fee is going to the factories, gigafactories and infrastructure costs associated with ramping up to building 500,000 cars a year.
The long term trend of the Model 3 will be fascinating to watch. As of Saturday the reservation count was up to 276,000, which is another hundred (or so) million dollars. It is a long way out to consider as the Model 3 is probably 18 months to 2 years away but it does get here, it will have more cowbell.