Car dealer ‘tricks’ borrowed to sell Tesla Model 3: Barclays

Elon Musk’s introduction of his cheapest Tesla model is drawing comparisons with the way dealers have pushed traditional cars for many years.

Tactics for marketing the Tesla Model 3 have been similar to how other car dealers advertise, Barclays analyst Brian Johnson says, Bloomberg reports.

Tesla generated more than 500,000 reservations for the new electric sedan, partly due to its US$35,000 base price. The company announced on Friday the total cost for a fully-optioned Model 3 could reach US$59,500, beyond many mainstream buyers.

“One of the oldest car dealer advertising ‘tricks’ is to advertise an irresistible price for a popular car – say a lease for under US$150 per month – in order to generate showroom traffic, only for the car shopper to later realise that the price is for a base model with little appeal,” Johnson says.

Musk revealed at his handover party Friday night that the basic Model 3 will have 354km of range, with a bigger-battery version selling for US$44,000 and capable of driving nearly 500km between charges. Choosing the high-end model and adding upgrades, including bigger wheels, colours other than black, the autopilot driver assistance system and a tinted roof, can add almost US$25,000 to the Model 3’s base price.

Musk’s encouragement for customers to upgrade to the Model S instead of waiting for a Model 3 is similar to car dealers using ads for cheap vehicles to lure in customers, then steering them toward higher-priced ones, Johnson says.

“The brand value and market cap of Tesla revolves so much around being not a car company but some sort of futuristic force to save the planet,” he says. “We will be paying close attention to social media and Tesla owner/reservation holder forums to see if there is any weakening of the faith among the true believers.”