Tesla shareholder from Fort Smith travels to Dallas to pre-order the more affordable Model 3

by Michael Tilley ([email protected]) 269 views 

Part of the line of people outside the Tesla store in Dallas.

Fort Smith businessman Tom Kirkham says he’s never voluntarily stood in a long line to buy a new anything. On Thursday, he was #178 in a long line in Dallas to buy a more than $35,000 vehicle he had yet to see and won’t get until 2018.

Lines were forming at small Tesla stores around the country on Thursday (March 31) to put a $1,000 deposit on the Tesla Model 3 – a car with as yet an uncertain price, although Tesla founder Elon Musk has hinted that the price begins at $35,000. That price tag is considerably less than other Tesla models with a price tag near or above $100,000.

Tesla Motors (NASDAQ: TSLA) is an electric auto manufacturer and a producer of electric battery systems. The company, founded in 2003, has been considered a disruptor in the auto industry, especially in competition to gain marketshare in the zero-emissions sector of the industry.

Thursday was the first day orders were taken at stores. Online orders were set to begin Thursday night, but those who visited a store are placed ahead of the line in terms of delivery. And for a new car model not set to begin full production until 2017, those early orders and anyone living on the west coast are the most likely to get the Model 3 delivered in 2017.

What’s more, the official unveil of the Model 3 is scheduled for 10:30 p.m. (CST) on Thursday, meaning the thousands of people in line have not seen the car they are buying.

That’s not a problem for Kirkham, who recently blogged about the Model 3. Based on other Tesla models he is confident the car will have a nice appearance, and he’s also impressed with Tesla’s marketing push.

A four-door Tesla Model S sits on the small showroom floor at the Tesla store in Dallas.
A four-door Tesla Model S sits on the small showroom floor at the Tesla store in Dallas.

“They’ve done a really, really good job (with pre-order marketing). They’ve been more secretive than Apple with this deal,” Kirkham said Thursday, adding that as a Tesla shareholder, he was happy to see so many people in the Dallas line.

‘MAKES ME FEEL GOOD’
As to why he spent the time and money to travel to Dallas to pre-order a car he had yet to see, Kirkham said he always wanted a Tesla car and believes in the vision of Elon Musk to transform the industry. But prior to the Model 3, he wasn’t ready to spend around $100,000 to support that vision.

“I just personally don’t want to spend that kind of money on a car,” he said.

Kirkham – owner of Fort Smith-based Kirkham Systems and a former co-owner of The City Wire – said many in the line already own the Model S, but were there to buy the lower-priced version for a family member or as a second car. He spoke with a husband and wife there to buy two cars. As for the plane trip to Dallas and standing in line for about two hours, Kirkham said it was anticlimactic.

“You walk into the Tesla store and they swipe your credit card and get your information and then you’re done,” Kirkham said with a laugh.

However, he turned serious when talking more about his decision to pre-order.

“I’ve never stood in line to buy anything. I’ve just never had the passion … to do anything like that,” Kirkham said. “But there is something about this product, because I consider it a consumer electronics product, that is truly different.”

Continuing, he noted: “I don’t want to come across like I worship this guy, but he (Musk) is wired different … and he has created something I can drive that cuts back on global warming, and reduces our fossil fuel use. You know, that makes me feel good.”

‘THE PROOF AWAITS’
What will make Kirkham feel better is if at least 100,000 people pre-order the car. Although Tesla officials are evasive on the pre-order number they desire, market watchers say the company needs to score big with the Model 3 to stay in business.

The company has never turned a profit since it began, but last year’s loss of $888.663 million – on revenue of $4.046 billion – was the largest to date. And as of Dec. 31, the company has delivered only 107,000 vehicles to customers.

In a post on Seeking Alpha, analyst Kal Telage said a concern is Tesla’s ability to ramp up production to meet demand while also maintaining vehicle quality, “where it has faced some criticism.” He also said Tesla’s battery gigafactory in Nevada must result in much lower battery costs “to be able to meet the $35,000 price for the Model 3.” The payoff for a Tesla win could be big, Telage noted.

“The takeaway is that Tesla actually wants to mass market ZEVs (zero-emission vehicles) for far less cost and for profit, and if they can do it, there is a huge global market waiting. Investors have to evaluate the new product, its cost and Tesla’s ability to compete in mass marketing. The potential is undoubtedly lucrative, but the proof awaits. The next two years should be interesting,” Telage wrote.

Kirkham is aware of the gamble Musk is making with the Model 3.

“If this thing turns out to be a bust, it could finish off Tesla,” he said.

Tesla shares closed Thursday at $229.77, up 2.88 cents. During the past 52 weeks the share price has ranged from a $286.65 high to a $141.05 low.