Tesla Model 3’s big preorder numbers are because it’s a status symbol

As industry insider Kumar Saha writes, the Model 3 is less about being green and more about making a lifestyle statement.

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Ah, what other cars would give to be the Tesla Model 3?

Last month, Tesla CEO Elon Musk’s long-awaited “mass market” showcase rewrote the handbook for all automotive launches. It’s too early to say if history was being made but it sure felt like it — like a second coming of the Ford Model T. Really, when has the world at large been so excited about a car?

Musk might be a master in manipulating media, but this time he has the numbers to back it up. Tesla clocked nearly 300,000 preorders for this approximately $40,000-$45,000 electric car within a week of the announcement.

Want a sanity check? Last year, the U.S. and Canada’s top selling passenger cars (Toyota Camry and Honda Civic respectively) had combined sales of just under 500,000.

Tesla’s achievement is all quite surreal when you think that the car does not even hit the streets till 2017 — and oil prices are still under $40 U.S. a barrel.

The oohs and aahs have very little to do with the Model 3’s alternative powertrain. It’s mostly about luxury, cool and sex appeal. Why buy a Lexus or BMW when you can make a statement for a similar sticker price?

All other automakers have tried to sell green cars to the general public, with mixed results. Tesla brings something else to the table — an aspiration. Call it La Dolce Vita on wheels.

The California-based automaker’s approach has a touch of Apple. Steve Jobs, the latter’s late iconic founder, spent his entire life creating a halo effect around all Apple products — stressing esthetics over utility. It’s amazing that after all these years of market leadership and sales volumes, Apple remains a premium, aspirational product. You drool over it, fuss about it and you cannot ignore it, even when you hate it.

Despite the numbers, Jobs never undermined his company’s niche status. Contrary to common business practice, he took the market top down, not bottom up.

Musk is doing something similar. He sensed the right electric car would be too expensive for the average buyer. In the Model S, what he had was not just an EV but simply one of the best cars to ever roll out of an auto factory. A car — like the first iterations of the iPhone or a designer gown at the Oscars — that will be talked about, mulled over, but never ignored.

Indeed, people have strong reactions one way or another on the subject of Tesla but I am yet to see anyone go “meh.”

The upcoming Model 3, despite claims, won’t be a mass market car. Rather, it should be labelled something like “affordable premium” — as a Mercedes-Benz executive once defined its entry-level CLA model to me.

Analysts are already pitching the Model 3 against GM’s Chevy Bolt. Technically, they are in the same segment with similar pricing, but I think the comparison ends there.

GM will sell a great electric vehicle at a good price — and it may well turn out to be better than the Model 3 (although I doubt that). What Tesla offers, on the other hand, is an entry point into its hallowed world: no dealerships, a supercharger ecosystem, remote car updates.

Ultimately, the Model 3 and its SUV-like Model X, will make or break Tesla. If any of them falter, it will be game over for Musk. If the cars succeed, March 2016 will enter the history books.

Kumar Saha is a Toronto-based automotive analyst with the global research firm Frost & Sullivan. To reach him, send an email to and put his name in the subject line.

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