March 31, 2016. Mark it on your calendar. That’s the day the car business died. Hundreds of thousands of people have now put $1,000 down to reserve a Tesla Model 3. The official number was 232,000 as of 10 o’clock last night. By the time you read this, it will probably be 250,000 and climbing fast.
A week ago, some speculated the company could get 100,000 reservations. They were dismissed as dreamers and lunatics. Elon Musk fanboi types. Over at Teslarati, people are now predicting 1 million reservations before Model 3 madness subsides. What does all this mean? Let’s take a look behind those numbers.
Do people really want electric cars?
Up until last Thursday, many in the automobile industry firmly believed that ordinary people didn’t want electric cars. The industry is ruled by men like Sergio Macchione, the CEO of Fiat Chrysler, who famously begged people not to buy the Fiat 500e because his company lost $14,000 on every car it sold. The belief was that electric cars were only good for appeasing the climate change nazis at the California Air Resources Board and the EPA.
Building electric cars was like being told to eat your broccoli when you were a kid. You did it because your parents made you, but you didn’t like it and you resented being told what to do. Nobody except early adopter nerds really wanted an electric car, did they?
Have you seen the photo on the internet of 200 people waiting in the rain in Montreal to get to a Tesla store? How embarrassing for other car companies! Apparently, there are a lot of people out there who actually do want to buy an electric car.
The initial success of the Tesla Model 3 has stunned the auto business. Can’t you just feel the gloom in boardrooms from Stuttgart to Detroit to Tokyo? Elon Musk says the average sales price of a Model 3 is expected to be $42,000. If so, Tesla has just booked nearly $10 billion in new business. It also has $250,000,000 in cash in its corporate coffers it didn’t have 2 days ago. That money can now be used to further develop the Model 3 and make it ready for production. What car company wouldn’t be jealous of Tesla’s success?
If you think the news is bad for the manufacturers, it is even worse for car dealers. People are fed up with high pressure sales tactics and sales people who know next to nothing about the products they offer. Take a look at the comments we got on our recent story about how General Motors is restructuring the Chevy Volt sales process. People are mad as hell and they’re not going to take it any more!
The ground is shifting under the traditional franchise dealer model. Car dealers are dinosaurs. Their world is ending. They just don’t know it yet.