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.