Tesla’s Model 3 and The Secret behind Its Success
A decade ago nobody could’ve perceived that a car company other than the existing giants would be able to dominate the American automobile market, yet here we are with the Tesla Model 3 which has emerged as the most selling car in the country’s luxury car sector. How did they achieve so much success?
The secret behind Tesla’s growing popularity, and especially that of its Model 3, lies in a profound understanding of consumer demographics.
Tesla understood that for its cars to sell, it would need to tap into the mass market by offering something unique, and that’s exactly what they did by offering a luxurious car for a price which fell within affordable range. The starting price for this model stands at $35K, far cheaper relative to the company’s other offerings such as the Model S or the Model X.
Is the Model 3 Appealing to the Mass Market?
For now, the Model 3 is still not a car which can be categorized as a mass market product. Although its starting price is $35K, a standard battery is required to operate it which unfortunately won’t hit the shelves for a few months. The Model 3s comes equipped with the long-range battery, however that increases the cost of the overall vehicle by $14K, totaling up to $49K.
The price does not stop there. If you also add the cost of the all-wheel drive feature powered by a dual motor, then the price shoots up to around $55K. If you want your Tesla vehicle to also have features like autopilot, or if you’d like it to be in a special color, or any of the other premium options which the company has to offer, then the price would be way more.
Although the price does not allow for the Model 3 to be categorized as a mass market vehicle, the company has nothing to worry about in that respect. After all, profit margins with cars perceived as luxury are much higher compared to those that sell to the masses. This will help the company, which is known to be experiencing some cash-related issues these days, to recover and gain financial muscle.
The Model 3 Will Have To Wait
Tesla CEO Elon Musk has revealed that the company would wait for a few months before the Model 3 is actually shipped, as shipping it right now would make the company lose money instead of gain from the popularity of the Model 3.
The target rate is $35K, and once the car achieves that, it will be ready to ship. The Model 3 is termed as a premium sedan by Tesla, so it is safe to say that the car is somewhere between a luxury car and a basic one.
Defeating the Competition
The competition is always going to exist in the American free market, and Tesla is competing with all the luxury car brands whether the company likes it or not. But for now, the competition is taking a strong beating from Tesla as far as numbers are concerned. Although the company had started out in the niche market of selling electric cars, it has now moved onto the luxury car segment with relative ease.
The Model 3s has sold around 56K cars in the third quarter of this year, according to stats announced by the company. In comparison, Audi was able to sell only 21K. It even beat the beloved Cadillacs or the Buicks by GM, and the Model 3 was able to take a much bigger chunk of the market compared to the Honda Acura.
Why Is There So Less Noise?
If it was any other car company, news of their success would’ve been plastered on all platforms. However that is not the case with Tesla’s success, and the reason behind that directly links to the company’s inclination to set targets and promises beyond what it can fulfill. That is why when they fall behind on their over-ambitious forecasted performance, people find it difficult to appreciate the company for all it has achieved.
Recent controversies have also overshadowed news of Tesla’s success. Musk had announced in August that the company would be privatized. However he later abandoned those plans, falling into a legal dispute with the SEC who accused Musk of deceiving investors. The company has had to pay a fine of around $20 Million, and Musk has had to step down as Chairman, although he will be staying on as CEO, much to the relief of investors.
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