Tesla Model 3 and high-volume production: streamlining options might be the key [Video]
Guest Blog Post: Trevor Page is the founder of the Model 3 Owners Club online forum, a site dedicated to Tesla, Model 3 reservation holders and eventual owners. He also has a popular YouTube channel with discussion of all things Tesla and EVs. You can also follow him on Twitter.
Since the reveal of the Tesla Model 3 on March 31, 2016, we’ve seen the reservations number balloon from over 115,000 in 24 hours to over 373,000 at last count. This unprecedented demand surprised even Tesla’s (internal) estimates and Tesla officials had to scramble to come up with ways to increase their production forecasts and ramp-up by two years and produce 400,000 cars by 2018 — instead of the original plan of 2020. While Tesla has been rather silent on the actual details pertaining to how they'll achieve these targets, some interesting changes to their options — specifically for the Model X — have been recently updated. These changes could point to how they'll streamline offerings for Model 3.
Image: Motor Trend
If you haven’t visited the Model X online configurator lately you might have missed a significant change to the interior options. While the Model S configuration options remain unchanged (for the time being) Model X interior choices are now bundled into packages. Surely Tesla has ample data on what the majority of buyers have been selecting and has likely streamlined the interiors by offering these popular combinations. Doing this allows them to better optimize the production process and smooth out the supplier chain. This is not a Tesla-exclusive initiative, just about every car manufacturer of high-volume cars offer such packages and bundles — not only of interior choices but in many cases they’re coordinated with exterior color choices.
I think this is pointing to a logical (and likely) direction that Tesla will be taking with the Model 3. Not only for interior colors, but, also the whole car as far as battery sizes, features, autopilot etc. By doing some simple back-of-the-napkin calculations we can extrapolate some possible “Good, Better, Best” combinations, much like Apple does for it’s computers and devices. And this is no coincidence given that Tesla has used many of the same business tactics pulled from Apple’s playbook (galleries, made-to-order cars, superior customer service, etc).
Consider the following image showing possible configurations...
Image: Trevor Page
In the “Good” configuration we could see a base battery pack of 60kWh, a single rear motor, metal roof, textile seats, keyless entry, active safety (present in all configs), autopilot hardware, 400kWh Supercharger yearly allowance, a 220 mile range and a 0-60 mph performance of 5.8 seconds. This car would be the base configuration coming in at the set-in-stone-price of $35,000 USD before incentives. Keep in mind — your exterior color and interior colors are still up to you as well as a few other basic options like cold weather package, tow hitch and maybe a high-amperage charger. I don’t mention air suspension (at this time) because it’s not a confirmed option and/or fit into Elon Musk’s usual “not as many bells and whistles as Model S”.
Image: Motor Trend
The “Better” options bundle at a $10K premium before incentives, which coincidentally is very close to Elon Musk’s comment of the average sale price (ASP) of a Model 3 would be close to $42,000 — which would offer a larger 75kWh batter pack (possibly a software locked 90kWh if margins allow for it), dual motors, all glass roof, leather seats, tech package, active safety, Enhanced Autopilot, 400kWh yearly Supercharger allowance and a 260 mile range with 4.8 second 0-60 mph performance. As with many Apple configurations this would prove to be the most popular choice giving buyers the extra range, performance and creature comforts they’d want.
The last config, “Best”, is essentially selecting every option possible. In the top end, we could see a 100kWh battery with Ludicrous, dual motor, panoramic roof, leather seats, premium package, active safety, Full Autopilot (including self-driving), Lifetime Supercharger allowance (if they offer it considering the switch to a credit system) and a low 3.0 second 0-60 mph performance.
Youtube: Model 3 Owners Club
I want to reiterate here that the prices and combinations are “guesstimates” but logistically make sense in order to allow Tesla to offer compelling Model 3 configurations. However, it should be noted with a caveat here that lower profit margins (than Model S) will ultimately dictate what they can do, and, these options bundles would also serve to streamline production and smooth out the supplier chain. While some may wish for more a-la-carte options choices like the Model S, the time frame in order to start production (about 10 months away from now) and Tesla being able to reach 200,000 cars sold in the US by the end of 2017 is likely weighing heavily on internal decisions — especially in order to maximize the tax credit opportunity for customers. If they have a choice between giving lots of options or doing the right thing for the customer, I feel Tesla will do the latter.