Only a few short weeks ago we wrote that Tesla Motors announced pre-sales for its Model 3. While the car will not be available until 2017, pre-sale orders quickly surged. In the first few days, orders passed 110,000 units for an estimated revenue of $4 billion. Seems like a lot, but wait…
A little more than one week after opening the ordering process, Tesla stunned the industry when it announced that it had received $1,000 deposits for more than 325,000 cars – corresponding to an estimated $14 billion in future sales revenue! This is an amazing volume for a pre-sale for a vehicle that is not yet in full production.
Sounds ideal for the company, but not necessarily ideal for customers. Last year, Tesla delivered an estimated 50,000 vehicles, which would make for an extremely long wait time for Model 3 deliveries. However, the cash from the deposits should help Tesla more quickly expand its manufacturing capacity.
One wonders though – since there are other electric vehicles on the market from companies such as General Motors, Nissan, Toyota, and more, what is it that makes this vehicle such an enticing draw for consumers?
Group Activities and Discussion Questions:
- Show Tesla’s announcement: https://www.teslamotors.com/blog/the-week-electric-vehicles-went-mainstream
- Discuss pricing strategies and models: demand-oriented, cost-oriented, profit-oriented, and competition-oriented.
- Which strategy is Tesla using? Why?
- Divide students into teams. Given the large volume of pre-orders, who is the target market for the Model 3?
- Discuss what would happen with sales volume if Tesla raised the price.
- Have teams develop a SWOT analysis for Tesla.
Source: New York Times, Wall Street Journal, other news sources