Tesla Model 3: Smart To Start Simple

APR 13 2017 BY EVANNEX 18

Tesla Model 3

Tesla Model 3

ELON MUSK IS SMART TO START WITH A SIMPLE TESLA MODEL 3 — HERE’S WHY

Keep it simple. That could be the guiding principle as Tesla [NASDAQ: TSLA] rolls out its much-anticipated Model 3 later this year.

According to Barron’s Next*, “Tesla is skipping fancier features in the first batch of Model 3 cars. That’s likely a smart move… [as] Tesla seems committed to keeping its Model 3 car as affordable as possible, at least when the car initially launches later this year.”

So how is Tesla keeping it simple?

“Elon Musk recently said that the first batch of Tesla Model 3s will have rear-wheel drive instead of all-wheel drive, with AWD models coming after six to nine months. And the ‘performance’ version of the car, with a bigger battery pack, may take a year. All of those fancier features will also boost the cost of the car, beyond its advertised starting price of $35,000 before incentives.”

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Matt Pressman.

Early on, if Tesla offers simplified versions of the car, it could help the company immunize itself against price-sensitive Model 3 reservation holders.

According to RBC Capital Markets analyst Joseph Spak, “One of our concerns had been that a good number of the 373,000 Model 3 reservation holders could have been in line for sticker shock when they went to configure their vehicles and found the options required to get their vehicle earlier required some heftier packages… Walking in thinking you are paying $35k and coming out having to pay $50k could have caused people to walk away from their reservations.”

Tesla Model 3 Interior Console spotted on recent prototype caught last week

Tesla could be embarking on a safer strategy as many Model 3 reservation holders, “currently drive Toyotas, according to Spak, so they don’t need all the bells and whistles of a higher-trim car. That, and a simpler car can be built more quickly, with less room for error.”

Musk also appeared to confirm that the Model 3 won’t have an instrument cluster, only a landscape center screen (see above) and no heads-up display. Spak elaborates in Investor’s Business Daily*, “To us, this seems straight out of the Apple playbook… Apple has a history of removing features consumers always thought they needed (computer disk drives, physical keyboards on a phone) before realizing they can live without them.”

With Tesla’s aggressive production targets, a “keep it simple” approach with the Model 3 should help with the initial stages of the production ramp. Spak concludes, “Tesla was positively surprised by demand for the Model 3 and having been scarred by the Model X launch issues, [they] are very focused on trying to meet their production goals.” And, focusing on simplicity and fewer configurations “could help Tesla ensure better quality and more easily meet volume targets which in turn gets them to scale and lower costs.”

===

*Source: Barron’s NextInvestor’s Business Daily

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

Categories: Tesla

Tags: , ,

Leave a Reply

18 Comments on "Tesla Model 3: Smart To Start Simple"

newest oldest most voted
MTN Ranger

I’m guessing a complex options like air suspension and/or Panoramic sunroof may be a later addition (or possibly not even offered at all). Other things like, premium/subzero/sound system/wood dash/larger wheels/etc should be easy to incorporate in the initial roll out.

One key item is where the larger battery option fits in availability. Personally, I can skip AWD and performance, but larger battery is a requirement for me.

Waiting

+5

Scott Franco

Yea, this is giving me pause. I’d always assumed I would pay about $50k in any case.

Toni

+1

A larger battery option is a must. And there is no reason to delay it. (Besides not being able to manufacture enough of the new 2170 cells)

(⌐■_■) Trollnonymous

When they announced they were going to have pre-configured models out of the gate, I am heavily considering getting a pre-configured model this year or next then just buy an S 100D later.

(⌐■_■) Trollnonymous

So I thought about more and nah.
I’ll wait for the “Model à trois” with AWD.

Paul Smith

Modèle trois, and it’s AWD for me. I’m in Canada.

Blackseries

….. or get a Jaguar I-Pace? Only available in AWD and 90Kw battery.

Just a thought.

Scott Franco

So please explain to me. What is it about the AWD that makes it a “must have” feature?

(⌐■_■) Trollnonymous

Snow.
I tend to go Ski/Snowboarding. Mostly right after it dumps or while it’s at the tail end of dumping a few feet of snow. That’s when it’s typically less people on the slopes as well.
I also have customers in Tahoe, Reno and Truckee. There’s an SC in Truckee.

Nate

If this is true I am less likely to end up cancelling my reservation. Still hope of getting in with a full credit..

Toni

Go and buy a VW diesel then. Guess you are one of the crowd that wants a M3 just because it is cool. And getting yours after everyone else would make it pointless for you.

internetthis@gmail.com

Performance and battery size are not mutually exclusive…

While I predict only one battery size initially, do we know if it will be the base/smallest battery?

Bojan
This makes sense. People who can afford fully loaded versions can also afford to miss the federal tax credit. Even if they can’t wait and end up buying a less optioned car (or even a car from another manufacturer), they can easily sell that and buy a higher optioned version once that becomes available. More price-conscious buyers, on the other hand, are more likely to cancel if they miss the tax credit and settle for a “lesser” electric car from one of Tesla’s competitors. Focusing on volume first rather than features allows Tesla to capture the low-end market before competing manufacturers get their affordable long-range models on the road (think of all the new models announced for 2020), building up their scale and also their public image. By getting a really affordable EV out there a few years before most of their competitors, they can boost the value of their brand, which means that once other manufacturers bring their models to market and the competition drives the prices down, Tesla will be able to continue to make sales even at a higher price point due to their brand image. If, on the other hand, Tesla were to deliver highly optioned… Read more »
Bacardi

Except that’s not true at all…”higher optioned trimed cars made first”
http://insideevs.com/tesla-model-3-debuts-march-31st-higher-options-cars-made-first/

First, this story is from an analyst, not Tesla who obviously missed the story I posted…
Second, “options/higher trims” is way to vague and is not mutually exclusive with “simple”…Is it really that much simply to cover a cloth/vinyl vs leather? Musk said every M3 will have autopilot so you can except delivery without it and still pay to add it later, does that really cost more?
Lastly, why reward the people who pay the least? Tesla should put a $7500 package together say autopilot and leather, you pay Tesla $42,500 but thanks to the tax credit you pay $35,000, it’s a win win for everyone except those hoping to receive the pure base model and the tax credit…

Bojan
I was speaking in hypothetical terms. There’s quite a lot of conflicting information about the delivery order out there. Sure, it was said that higher optioned cars would get priority. It was also said that West coast would get priority, then East coast, then Europe, then Asia. It was also said that Tesla and SpaceX employees would get priority, then existing owners…. Now, what happens when a Tesla employee orders a base model? When will they get their car? What about West coast base model vs East coast optioned model? East coast base model vs Europe optioned model? etc. We still don’t know how these various criteria will be weighted when they come into conflict. Maybe the “more options first” criterion will dominate. Maybe not. Then there’s talk of the possibility of batch production. Which individual combination of options will likely have the most pre-orders, and thus make the most sense to batch-produce? I think low optioned cars will dominate due to simple statistics. Even if there’s actually more people who want a car with more options, getting more options on a car means that there’s more possible combinations you can get, with the exception of a fully optioned car… Read more »
Pushmi-Pullyu

Bojan said:

“If, on the other hand, Tesla were to deliver highly optioned models first, they’d get bad press for not delivering the cars at the promised price point.”

Tesla has already stated quite clearly that more fully optioned Model 3’s will get production priority over lower trim level versions. And that’s what Tesla did with both the Models S & X; starting with the fully loaded Founders’ Editions, then the Performance Editions before moving on to lower trim levels.

Now, that’s not to say that Tesla will be following exactly that path with the Model 3; they’ve already said there will be no Founders’ Edition. The Model 3 is not aimed at the luxury or “premium” price segment of the Models S & X.

Tesla did have a PR problem with many articles at the time of the Model X rollout describing the MX as a $152,000 car; that is (or was) the maximum price, not the base price. I can certainly see that Tesla wants to avoid repeating that with the Model 3 rollout, but just how far they’re willing to go to avoid that is an open question.

walt

Its also a clever way to initially suppress demand.