My friend Scott was able to sneak off to the Tesla showroom on his lunch hour last Thursday to make his reservation for the Tesla Model 3. He's one of about 276,000 people who are similarly gaga over that car.
“I will need help in figuring out how to wait the two years until it is delivered,” Scott emailed to me, adding a perhaps unnecessary :). Scott sees the Tesla Model 3 as an entry-level luxury car, on par with the BMW 3-Series. The 215-mile range makes it feasible transportation for long-distance ski trips.
Scott raves, “At $35,000, the Tesla 3 is a great deal. If the incentives are in place — which is why I rushed to the mall to make a deposit, so I’ll be near the front of the line — it’s a downright steal at $24,500.” That’s the federal income tax credit plus the state rebate at work.
The Chevy Bolt is a potent entry, with more than 200-mile range, and it will beat the Model 3 to market. Will that be enough to overcome the Tesla cool factor? (Photo: Dave Pinter/flickr)
I find Tesla mania fascinating, and it proves that the company — without advertising — has succeeded in creating a highly desirable brand. That’s why it’s such a favorite against a car, on the market first, with almost identical stats — the Chevrolet Bolt. You know how people want a Mercedes-Benz more than they want a similarly equipped Hyundai, and are willing to pay extra for the prestige of the three-pointed star? Bingo.
I was talking to Mike Cetera, personal loan and credit analyst at Bankrate.com, and he told me some amazing things about the market right now and about Tesla’s curious appeal. “I would love to have one of those cars,” he told me, adding that he wouldn’t accept a Bolt as a substitute. “Tesla has a lot of cachet; it’s cool,” he told me. “My wife and I have talked about reserving one, but it may have to wait because we’re finishing up an auto loan.”
Cetera also had some news for me. According to Bankrate.com research, one in six Americans is planning to buy a car in the next year, and people making between $30,000 and $49,000 annually are “almost two times more likely to be planning a car purchase this year than those earning more than $75,000.”
What’s more, millennials are the most likely age group planning to buy a car this year. That’s interesting, because these are the folks who are supposed to not buy cars at all. And what cars are most likely to appeal to millennials? Tesla, Tesla, Tesla. And this is a group increasingly confident about its buying power. Reports Bankrate:
While Americans of all ages are feeling optimistic about their finances, millennials are the most comfortable with their savings, debt, net worth and overall financial health.
All of this suggests that Chevy might have done well to create a new division — like BMW’s i — to sell its electric cars. Hyundai did just that for luxury cars, with the upmarket Genesis, a big hit at the New York Auto Show. And it also introduced the green Ioniq line (three new cars, hybrid, plug-in hybrid and battery electric) at the same venue. Not quite a new brand, but a separate identity.
This graphic reflects the received wisdom, but maybe millennials are getting into more of a car-buying mood. They're making better money these days. (Photo: Geekstats/flickr)
Prius has some luster as a name, as do the Japanese luxury divisions—Infiniti, Acura and Lexus. Chevrolet is simply, despite a luminous history, a meat-and-potatoes brand. The Chevrolet Volt has done OK, but suppose it was the Gaia Volt or some such?
The Bolt will be on the market as early as the fourth quarter of 2016, a full year before the Model 3. A lot of people won’t want to wait for the Tesla. But the pull of the Model 3 is strong. And that gets us back to those millennials, not to mention the $30-$49,000 income folks definitely planning to buy a car in the next year. They really, really want Teslas, too, and now there’s one they might — stretch, stretch — actually afford. At least on a layaway plan.
“It’s the cool factor,” says Automotive News. “There is no other way to explain the people plunking down $1,000 refundable deposits even before the Model 3 debuted last week to a fire hose of gushing media coverage.” Auto writer Aaron Gold sums it up. “Comparing Tesla and Chevy is like comparing Apple and Microsoft. Brand matters.”
Here's a video look at the Model 3 from the introduction in Hawthorne, California, last week: