Tesla Model 3 reservations top 325,000; Tesla projects average price ~$43,000
07 April 2016
Tesla Motors reported that Model 3 reservations have topped 325,000, corresponding to about $14 billion in implied future sales (average unit price ~$43,000). Base price is $35,000.
Model 3 reservations secure the approximate priority within the buyer’s region for taking delivery of the desired Model 3. The reservation ($1,000) is effective when it is placed, and when Tesla receives payment. (Now representing more than $325 million of no-interest cash that can be applied to whatever Tesla needs.)
The reservation is not a order. When the start of production for a reserved vehicle nears, Tesla will ask buyers to configure the Model 3, create an order for the vehicle and send a Purchase Agreement indicating the purchase price of the vehicle, plus estimates of any applicable taxes, duties, transport and delivery charges, and any other applicable fees. The reservation is refundable if the prospective buyer decides not to proceed.
Coming on the heels of the Q1 report in which Tesla acknowledged problems “severe” Model X supplier parts shortages in January and February (earlier post), Tesla now faces increased pressure to scale up its production and supply chain infrastructure to support the clear production demand for the Model 3.
The company also now faces the need for an even more rapid expansion of its service infrastructure, which includes not only facilities, but trained technicians to populate them. That also implies expansion of the training program, as well as a service parts supply chain—all issues with which larger car companies have to deal.
A rather smart way to partly finance Model III development.
However, 500,000 X $1,000 = only $500M.
Total development and pre mass production cost may be 6 to 10 times as much? A new 'shares issue' may be required?
Posted by: HarveyD | 07 April 2016 at 11:27 AM
Tesla is to be congratulated on a hugely successful reveal and rate of reservations.
I would not personally fancy advancing interest free venture capital like this, as the deposits are in no way ring fenced or placed in escrow, but if depositors want to do that, that is up to them.
Posted by: Davemart | 07 April 2016 at 12:15 PM
The real story here is the reputation of the company is such as to garner money from people who willingly buy a place in line to buy a 'pig in a poke.' All this against all the good advice your Daddy ever gave you.
Posted by: Lad | 07 April 2016 at 01:13 PM
A 'pig in a poke.' was during the white nigger 'addicted to oil' Bush administration.
How are the Bush brothers doing after years to reflect and cry?
Posted by: kelly | 07 April 2016 at 04:27 PM
kelly:
Meant in a good way; meaning people have faith in Tesla. and it is amazing people, me included, would show it by buying a place in the queue for $1k. Perhaps I was a bit obtuse for younger people on the first post.
Posted by: Lad | 07 April 2016 at 08:03 PM
So the average selling price is estimated to be 43,000 USD by Tesla. Assuming 50% sells for 35,000 USD the other 50% will have to sell for an average price of 51,000 USD. We know the 35,000 USD is the Model 3 with RWD and 215 miles range. We also know a duel-engine 4WD option will be available. That option cost 5k on Model S so it is probably going to be 4,000 USD for Model 3. But that is only 39,000 USD for a 4WD Model 3. A 10,000 USD battery upgrade to 90kwh and over 300 miles of range is almost certain or it would not be possible to get close enough to the 51,000 USD for the 50% of the cars that has that average selling price. Then there will be the ludicrous speed option probably costing 7000 USD making the Model 3 into a zero to 60 in less than 3 sec. That Model will cost about 35+4+10+7=56 USD. Then there will be the autopilot option. It could be 3,000 USD. Audio upgrade for 1,500 USD, Leather seats and premium panels for 2,500 USD, Extra panoramic roof for 1000 USD (small 2 foot area in roof not already in class), larger better looking tires 2,000 USD and a trailer hook for 1000 USD and winter package for 1000 USD.
So a maximum loaded model 3 would be 56+3+1.5+2.5+1+2+1+1= 68,000 USD.
The genius of Tesla is that they are the only BEV maker in the world with a strategy that says we will only make a BEV if we can do it in a way that makes a better car than a similar priced gasser in the same segment. They have done that with their 70k USD + Model S and their 80k USD + Model X. Now they will do it with a 35k USD + Model 3 that hopefully will start shipping by Christmas 2017. All the producers of 35k+ gassers in the compact sedan segment must be quite shaken. They know their business is about to die out if they can’t match Tesla’s offer and they can’t unless they start making BEVs.
Posted by: Account Deleted | 07 April 2016 at 11:51 PM
A lot of people I talked to during the five hours we all stood in line were Model S owners. That's a stong statement of owner satisfaction.
Posted by: electric-car-insider.com | 07 April 2016 at 11:54 PM
Yes, Tesla also has a policy of prioritizing deliveries of Model 3 to Tesla employees first and foremost and second to prioritizing current Tesla owners and third to prioritizing preorders in geographic proximity to California. After that they look at the order in the preorder list with a priority to people who ordered by lining up in front of Tesla stores of cause. This all makes sense to maximize Tesla loyalty for employees and customers and to minimize cost of making and delivering the Model 3.
I am wandering where Tesla will build their second Giga factory and car factory. It is going to be Europe and for these facilities to start op by 2021 they need to make the early investigations today. Tesla now knows they will have demand for much more that 500,000 cars per year by 2020 especially if they all come with an option that can make them fully autonomous. That will guarantee far greater demand than Tesla can possibly supply even if they could make 10 million BEVs per year.
Posted by: Account Deleted | 08 April 2016 at 12:20 AM
TESLA may have to do like the all majors and have factories in Asia, Europe, So. America/Mexico to meet demands?
Co-locating future battery and car factories may reduce cost?
Posted by: HarveyD | 08 April 2016 at 09:16 AM
$500 million is what they borrowed from the government then paid back early.
Posted by: SJC | 08 April 2016 at 10:53 AM