Silicon Valley execs and others who've been driving by the Tesla Motors dealership in Menlo Park have noticed something strange in the past few weeks.
There are more cars than in the past. On some days, there are few dozens of Tesla Roadsters in and around the showroom. While that's normal for a dealership these days, it's been rare for Tesla, which only started shipping cars last year. Only about 200 Roadsters are actually on the road.
The cars at the dealership are invariably not cancelled orders for cars or cars that are available for sale for people who want them, stated Rachel Konrad, a spokeswoman for the company. Instead, these are cars waiting for their owners to arrive. Rather than have the cars shipped to their home, customers are coming to Menlo Park to get the personal two-hour training session.
"Your car sits and waits for you while we wait for you to pick it up," she said.
Tesla is also producing more cars than in the past. This month, it will start producing around 20 Roadsters a week.
"No one is immune. We've seen a slowdown and a little pick up in cancellations," she said. "But the cars you see are taken."
Tesla's deposit process also ensures that early buyers remain buyers. To buy a Roadster, customers have to put $5,000 down to get on the waiting list. They then must submit another $60,000 to get a reservation on a specific car. Three months before the specific car is finished, buyers have to submit the remaining balance, which runs to $44,000 or more. Ultimately, the car is paid for before final assembly is completed, similar to how Dell sells its PCs. Musk has said the company will be profitable by the middle of this year; however, profitability is likely partly helped by the fact that the company has had to put off building a larger factory because of lack of capital.
If the economy worsens, customers could begin to jump off the waiting list before the larger deposits are required. One VC who visited the dealership recalled that the Tesla sales rep said the company had a few slots left on the 2009 manufacturing run.
Later this month, the company will show off an early prototype of its Model S sedan on March 26 in Southern California. After rebates and credits, the car will cost just under $50,000, but don't expect to see one on the road (or in the dealership) until 2011. The car comes out after several large manufacturers will release plug-in hybrids, which almost completely run on electricity.