Lessons Learned Standing in the Tesla Model 3 Reservation Line

Apr 01, 2016

"Find the ticket guy! You have to talk to that ticket guy," a Phoenix man shouted as I rounded a cluster of people coiled in a snake-like queue in front of the only Tesla showroom in Arizona.

This nameless ticket guy had reached legend status among the more than 200 people who descended Thursday upon the Scottsdale Fashion Square in the early morning hours—a time typically reserved for mall walkers and the occasional security guard. (That number would eventually surpass 900 people.) He prevented chaos and was generally credited for the excited, yet relaxed mood among those who had lined up hours before the Tesla store opened to reserve the automaker's first mass market all-electric car: the Model 3.

The elusive ticket guy turned out to be easy to find. He was No. 3 in line and a highly organized guy.

Tesla's Direct Sales Model

Tesla has a different business model than other automakers. It sells its own cars directly online and through branded stores, not through franchised dealerships. All U.S. states have laws that prevent automakers with existing franchisees from opening their own dealerships to compete with them.

But some states—such as Arizona, Michigan, and Texas—have taken an extra step and passed laws that ban direct sales. In these states, Tesla can still have a showroom, where consumers can look, but not buy, its Model S, Model X, and eventually, Model 3 vehicles. Tesla staff cannot discuss the cost of the car. They must instead direct customers to the website or a store in a neighboring state for more information.

The Model 3 is arguably Tesla's most important introduction to date. The company's mission has always been to produce a mass-market electric vehicle. It’s why Tesla is building a massive $5 billion battery factory in Nevada that will have the capacity to produce 50 gigawatt-hours of battery packs a year. By the end of 2017, the facility is expected to reduce the per-kilowatt-hour cost of Tesla lithium-ion battery packs by more than 30%.

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That improvement in battery performance translates into a car that is cheaper buy. The Model 3 will cost $35,000 before tax incentives. The Tesla Model S sedan starts at about $70,000 for the base model.

In other words, the Model 3 is a big deal. It’s why so many people—shareholders, rivals, skeptics, and fans alike—are watching and analyzing every step that Tesla makes with this launch, leading up to the March 31 reservation event and the car’s eventual 2017 release.

Why Arizona Matters

Few were surprised by long lines in California, a state that encourages electric vehicle ownership through incentives, infrastructure, and laws like access to the magical carpool lane. It's also where Tesla is based.

It was more difficult to gauge what would happen in Arizona, a state that despite the anti-Tesla direct sales ban provides some modest incentives for alternative fuel vehicles. In certain urban areas, it has built up public charging infrastructure.

When I entered the Tesla store in the Scottsdale Fashion Square around 7 p.m. on March 30, one couple was inside. There were no signs of people preparing to camp out in hopes of entering the reservation line early.

By the following morning, a different scene had unfolded. At 10 a.m., when the Tesla store officially opened and began accepting $1,000 deposits for the Model 3, about 900 people were lined up. An initial queue of about 60 people were in an official area set up with the kind of movable barriers you might find outside a club or concert. From there, a long line formed, snaking its way down the middle of the mall to the entrance of the Nordstrom department store before folding back and returning short of the Tesla store.

In some ways, states like Arizona—not California—are the true testbeds for Tesla's future. Yes, far more people reserved Model 3 vehicles in California than in Arizona. But demand in a state where people must go out of their way to reserve, buy, and drive an electric vehicle can help gauge acceptance by the general public across the United States. In Arizona, it wasn't just the number of people that showed up to reserve a Model 3 that surprised me. It was who was lining up, and their willingness to throw down $1,000 to reserve a car nobody had seen publicly yet.

Back to the Ticket Guy

The ticket guy is Jarod Prosise, a software engineer at Garmin, who has never driven a Tesla before. He's never been a passenger in one either. Yet here he is, No. 3 in line, ready to plunk down $1,000 for a car he's never seen, let alone driven. And in that line of more than 900 people, Prosise wasn't so unusual.

Of the 30-odd people I spoke to, three-quarters had never driven a Tesla before. Many owned electric hybrids, the Prius being the most common. But others owned gas-guzzling SUVs and sports cars, and they said never seriously considered buying a hybrid before.

Of course, there were those who seemed to fit the Tesla profile more closely. The No. 1 person in line, Dave Shackelford of Phoenix, owns a 2013 Nissan Leaf with a license plate that says "Tesla" and is a "huge fan" of CEO Elon Musk. Shackelford said he was compelled to show up and reserve a Model 3 in part because Tesla is "the only car company that takes electric cars seriously."

The people waiting in line represented a range of ages—from folks in their 60s to others in their early 30s—and came from all over the state, including Tucson, Flagstaff, and Prescott. Most of the ones I interviewed had professional jobs—a few engineers, software developers, a veterinarian, an IT specialist, and even the director of public relations over at GoDaddy.com.

They all shared one thing in common: every one of them handed over $1,000 deposits—albeit refundable ones—without actually seeing the product. The Model 3 wouldn't be unveiled until later that night.

The phenomenon wasn't isolated to Arizona. By the time CEO Elon Musk took the stage to unveil the Model 3, more than 115,000 reservations had been made worldwide—and that figure has certainly grown since that tally. If all of those reservation holders actually buy a Model 3, that's more than $4 billion in revenue for Tesla.

It was a turnout that seemed to even catch a normally optimistic Tesla staff by surprise. Everyone except the ticket guy.

Prosise says he arrived at 5:43 a.m. A couple dozen other people were there, and a line formed. Within a few minutes, a security guard told them they couldn't congregate until 8:45 a.m. Prosise had anticipated a large crowd as well as an equally unprepared staff and security. Before he left his house that morning, Prosise grabbed a roll of tickets, the remains of a raffle from a baby shower his wife had hosted the year before.

Prosise handed out the tickets to the now anxious and ever-cranky group. The tickets would allow them to disperse as security had asked while still maintaining their place in line. By 9 a.m., he had passed out 230 tickets, the official line was finally established, and Tesla staff had agreed to honor his unofficial fan-based ticket system.

An hour and three minutes later, Prosise and a few other early birds exited the Tesla store amid cheers from the crowd and shouts of congratulations.

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