Elon Musk says Tesla Model 3 pre-orders hit 180,000, but can he deliver?

Tesla Chief Executive Elon Musk, speaking to an adoring crowd of Tesla fans, pronounced the Model 3 a success upon its birth Thursday night in Hawthorne. 

And by the reaction in person and online, Tesla fans overwhelmingly agreed. 

Pulling the covers off the fourth vehicle in the company's short history, Musk declared that more than 115,000 vehicles had been pre-ordered in the first 24 hours. By Friday morning, Musk tweeted an update that the number had climbed to 180,000 orders in 24 hours.

He said the selling price with an average option mix was probably about $42,000, which came out to a total of about $7.5 billlion in a day. 

"Future of electric cars looking bright," Musk tweeted.

Shares of Tesla stock surged Friday morning, gaining $10.43, or 4.5%, to $240.20.

Analysts said the number of pre-orders for the Model 3 exceeded their expectations.

“Typically, you don’t see pre-sales like that at all,” said Jack Nerad, executive editorial director and market analyst for Kelley Blue Book. “There’s a magic around Tesla. There’s a magic around Elon Musk that has enthralled a lot of people.”

In a Friday note, Evercore ISI said investors surveyed Thursday predicted that Model 3 orders would total 55,000 in 72 hours. By the end of the year, they expected orders to hit 117,000 cars.

Evercore analysts said in the report they had thought the survey results were “overly optimistic.”

“How wrong could we have been?” the report said.

Traditionally, mass market auto customers have wanted to see vehicles for themselves, take a test drive and read reviews before putting down a deposit – none of which happened Thursday with Tesla, according to the report.

“It seems that Tesla’s brand equity has enabled it to break all convention with consumers happy to place a ‘blind’ order,” the report said. 

Tesla’s previous models have been plagued by delivery delays, and this history could be an indicator of what is to come, Nerad said.

But it might not necessarily dissuade the scores of people who put down deposits since many are already familiar with Tesla’s history and are prepared to wait until 2018 to get the car, said Jessica Caldwell, senior analyst at Edmunds.com.

Despite the number of “rabid” Tesla fans, Nerad said conventional automakers with electric vehicles will still be able to compete through the sheer number of dealerships and their retail power.

“The key ingredient for a broad line manufacturer is they can sell and probably will sell EVs [electric vehicles] at a loss,” he said. “I think Tesla Motors can’t continue to operate at a loss forever. This is when they’re really supposed to become much more than a niche player in the industry.”

The lower, sleeker Tesla -- at least 20% smaller in stature than its bigger brother, the Model S -- will be able to go from 0 to 60 mph in less than six seconds in its most affordable configuration. 

"The Model S and X made the Model 3 possible," Musk said. "So to all of you who bought an S or an X, thanks for paying for this."

He noted that with any new technology "it takes multiple iterations ... and economies of scale before you can make it affordable."

The Model 3 will be fitted with Tesla's "autopilot" features, which have helped the car be among the safest on highways.

Standing before a collection of new Model 3s, Musk reminded the audience that the car represented the culmination of a long-held dream to bring affordable, zero-pollution vehicles to the world's highways. 

Musk began his pitch by pointing out that CO2 levels and global temperatures were at record highs, and said the Model 3 would be a solution to that problem. 

Earlier in the day, Tesla showrooms around the world were flooded with eager customers who happily plunked down $1,000 deposits to reserve their cars.

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They didn’t know what the car looked like, how it would perform or even the exact price, but that didn't matter to the most ardent of fans, some of whom camped out for hours overnight to be among the first in line for the car. The car won't become available until late 2017 at the earliest.

Analysts said the event more closely resembled the premiere of a blockbuster film or the latest food fad than the release of a new car.

“Other carmakers launch new models all the time and I don’t remember ever seeing this level of excitement,” said Max Zanan, co-founder and chief executive of IDDS Group, an automotive consulting firm in New York. Tesla “has been able to carve out their own customer base and that base is willing to delay purchasing other cars and wait for a Tesla.”

Even with Thursday's excitement, critics say the Model 3 may arrive too late to beat other equally affordable long-range plug-ins coming from major manufacturers, and it will be competing for a stubbornly small share of the car-buying public interested in plug-in electric technology.

And there are doubts that the company can even get the car on the road in a timely fashion.

The industry publication Green Car Reports has said the success or failure of the Model 3 "will almost certainly make or break Tesla as a car company."

Staff writer Shan Li contributed to this report.

Twitter: @misterfleming 

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UPDATE

9:44 a.m.: This article was updated with additional comments from analysts about pre-orders and information from a tweet by Elon Musk.

9:07 a.m.: This article was updated with additional comments from analysts about pre-orders exceeding expectations.

7:51 a.m.: This article was updated with Tesla's stock price and a statement from an analyst at Kelley Blue Book. 

This article was originally published at 3 a.m.

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