A decade-and-a-half 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 stood 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?
At the time, the Model 3 was still not a car that could be categorized as a mass-market product. 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 did not allow for the Model 3 to be categorized as a mass market vehicle, the company had nothing to worry about in that respect. After all, profit margins with cars perceived as luxury were much higher compared to those that sell to the masses. This would help the company, which was known to be experiencing some cash-related issues these days, to recover and gain financial muscle.
The Model 3 Will Have To Wait
Before its launch, Tesla CEO Elon Musk revealed that the company would wait for a few months before the Model 3 was actually shipped, as shipping it then would make the company lose money instead of gain from the popularity of the Model 3.
The target rate was $35K, and once the car achieved that, it would 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 started out in the niche market of selling electric cars, it subsequently moved onto the luxury car segment with relative ease.
The Model 3s sold around 56K cars in the third quarter of 2018, 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 were 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 fell behind on their initial over-ambitious forecasted performance, people found it difficult to appreciate the company for all it had achieved.
Additionally, controversies have also overshadowed news of Tesla’s success. Musk once announced that the company would be privatized. However, he later abandoned those plans, falling into a legal dispute with the SEC which accused Musk of deceiving investors. The company had to pay a fine of around $20 Million, and Musk had to step down as chairman, although he was to stay on as CEO, much to the relief of investors at the time.