Tesla Model 3 Launch: Brand Boost or Bust?

All eyes are on Tesla this week as the first batch of its much-anticipated Model 3 rolls out. While the car’s $35,000 price tag promises to expand Tesla’s mainstream appeal, it remains to be seen whether the big bet on the Model 3 will be a turbo boost for electric cars, or a disappointing moonshot for a company that has struggled to achieve profitability.

Much more than a product launch, Tesla’s introduction of the Model 3 will be a bellwether for how the company expands its brand and fosters customer loyalty going forward.

Tesla’s early models suffered from software glitches and spotty manufacturing quality, but the small number of cars on the road meant those problems were isolated. Now that Tesla is going mainstream, the pressure is on.

The Model 3’s reliability, battery life and technology will all be under the microscope from day one, along with a charging network that will suddenly be in high demand. Missed expectations risk thwarting Tesla’s plans for new products like vans and trucks, not to mention hurting its stock price.

Nearly 500,000 buyers have taken a leap of faith by putting down $1,000 deposits on the Model 3, but they’ve since been in the dark – left to wonder when their cars will be arriving.

Now that the first cars are indeed delivering, Tesla has an opportunity (and responsibility) to win over consumer sentiment by informing buyers on where their cars stand in the assembly line and setting – and meeting – realistic delivery dates. A wave of buyers reneging on their orders due to missed deadlines would be catastrophic for the brand.

With so much at stake, Tesla could have spun-off the Model 3 as a mainstream subset of its brand, much the same way Toyota launched Lexus as a luxury alternative to Camrys and Corollas. Doing so would have kept Tesla’s ‘luxury’ persona intact while shielding the company from the threat of a launch gone bad.

Tesla made the calculated decision to brand the Model 3 alongside existing models that cost double – even triple – the price. Only time will tell if that was a smart bet.