Surprisingly, Most Tesla Model S and X Owners Haven’t Opted For Model 3

Tesla Model 3

MAR 20 2018 BY STEVEN LOVEDAY 86

Research shows over 70 percent of current Tesla Model S and X owner reservation-holders decided not to configure and buy a Tesla Model 3.

Our perspective (along with that of most others’) of the whole Model 3 pre-order/delivery situation has been a bit puzzling. This is because Tesla lacks transparency, and the Model 3 has been an entirely different beast than the company’s previous cars. Let’s try to put it in perspective.

TYPICAL TESLA MODEL 3 RESERVATION HOLDERS CURRENTLY DRIVE TOYOTAS

About 500,000 people pre-ordered the Model 3 and paid a refundable $1,000 deposit. Tesla employees and those with company affiliation were the first to take delivery. Being that the automaker was unable to produce cars in any significant numbers meant that this first step took a great deal of time.

Red Tesla Model 3 at handover eventTo many, it appeared that “so many or nearly every” employee ordered the Model 3, so it was taking forever for deliveries. However, while many Tesla employees and other “relateds” did order and take delivery of the car, the number was actually quite small in the grand scheme of things.

Remember, from July to December 2017 Tesla only delivered 1,772 of these cars, and some of those even went to non-employees.

Step two of the process started deliveries to current Model S and X owners. Many an assumption suggested that just about every current Tesla owner took the opportunity to pre-order the car.

It makes sense … they were supporting Tesla by giving the automaker $1,000 to play around with and showing interest in the upcoming vehicle. Also, if there was a slim chance they might decide to buy the car, not reserving one would be idiotic.

In the end, how many of these Model S and X owners are actually owners of a Model 3?

According to Bernstein Research analyst Toni Sacconaghi Jr., less than 30 percent of current Tesla owner reservation-holders have chosen to move forward and configure and buy a Model 3. He recently shared in a note to clients:

“If correct, this take rate would be substantially worse than predicted by our July 2017 survey, which had indicated that up to 69% of S/X owners with reservations were likely/very likely to take delivery of their Model 3.”

Sacconaghi’s research also indicates that only 55 percent of employee reservation-holders bought the car. However, he was careful to say that there are many potential reasons that could have led to his findings. The analyst wrote (via MarketWatch):

• Lack of configurations: Tesla is only offering one Model 3 configuration at the moment, for $49,000. In the future, Tesla is expected to offer a base model at Musk’s promised price of $35,000, as well as all-wheel-drive configurations that potential owners in cold climates may be waiting for.

• Bad timing: Owners may be waiting for the lease on their Model S or Model X to expire, or waiting to sell their current Tesla.

• Lease option: Some may be waiting for Tesla to open up leasing options for the Model 3

Sacconaghi himself is a Tesla owner and did not yet decide on a Model 3. He added that people may be waiting to decide once there’s more availability and information:

“Those of whom are genuinely undecided on the Model 3, and/or may be waiting further data points on initial build quality, and perhaps competitive EV offerings from other manufacturers.” 

When the analyst decided not to follow through with his Model 3 reservation, Tesla contacted him three times within a month and even reached out with a final personal email. Tesla’s behavior surrounding his reservation made Sacconaghi conclude:

“Based off this experience, our hypothesis is that Tesla may be modestly concerned/surprised about the Model 3’s low take rates. In particular, we suspect that our most recent email from Tesla (asking us to identify our desired Model 3 configuration) was part of an effort to determine which new configurations might be most effective in converting deferrals to deliveries.”

Source: MarketWatch

Categories: Tesla

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86 Comments on "Surprisingly, Most Tesla Model S and X Owners Haven’t Opted For Model 3"

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Makes sense. Why order an inferior (assuming their S/X isn’t too old), smaller version of the car you currently have? Unless you need an additional car.

(⌐■_■) Trollnonymous

You beat me to it!

I know many TMS&X owners and none of them want the 3 citing “don’t need it” and “too small”.

A lot of the Volt, PiP and early LEAF owners are on the list though.

Yes, model X and S owner probably don’t want to step down into what they consider a “less luxurious” vehicle. As it is,. the Model S isn’t at the same fit and finish, and luxury level as the traditional German luxury offerings.
Just read an interesting review from a customer that traded in his P90D S for a new M5. Much more luxurious and well crafted interior in the BMW.

http://f90.bimmerpost.com/forums/showthread.php?t=1476114

And before you think the BMW is much slower, the new M5 was tested at a 2.8 sec 0-60mph time, and high ten second quarter mile. So although not quite is quick off the blocks, the M5 will walk the Tesla from a roll on contest, up to its 180mph+ top speed.

You’re comparing a 50k Model 3 to a 100k M5? P100D is a better comparision

M5 starts at $102k in the US. P100D starts at $123k, well loaded, w AWD.

Nope, specifically said “even” the Model S lags far behind the BMW in refinement and creature comfort. And the M5 is till less money than that P90D sold for.

“…… As it is,. the Model S isn’t at the same fit and finish, and luxury level as the traditional German luxury offerings.
Just read an interesting review from a customer that traded in his P90D S for a new M5. Much more luxurious and well crafted interior in the BMW.I find it interested when the S is compared to BMW. ”

In all of your statements nothing is mentioned about sustainability or the fact that Tesla vehicles are trans-formative in their green technology being used on a luxury platform. It is all about other factors – which says to me that the S is competitive aside from being an electric vehicle.
To me and many people that own a model S – the fact that it is an EV is a huge part of the equation. I will never buy an ICE vehicle again despite its comparative performance and luxury. The model S is superior in every way compared most equivalent German brands other than fit and finish. Those pieces are lower on the list to many Tesla buyers than the superiority and sustainability of the drive train.

Plenty of reasons. I may need to buy a car for my 16 year old who just got his license, one for the nanny to pick up the toddlers in and maybe another one for the domestic help since they always complain that sometimes I don’t announce that I am dining in early enough and they have to rush to the grocery store.

If you’re buying a car for a 16 year old new driver then get them a Gen 1 Leaf. Even that has plenty of acceleration to potentially misuse.

Don’t buy a sports car for a new driver, especially not one who’s a teenager. I don’t care how much money you have, it’s just a really, really bad idea.

And yes, a Model 3 going 0-60 in five seconds counts as a sports car. Try to think back on how things were when you were a teenager and show some common sense.

You can also read this as well as many other articles on this topic: http://attorney-myers.com/2016/12/5-reasons-teen-car-accidents/

Rereading your response, I guess it was tongue in cheek, so I apologise if I took it too seriously.

Surprisingly, 99% of 2012-2017 Lexus LS and Lexus LX owners have decided against buying a 2018 Lexus IS.

I agree, these analyst are smoking something.
How can a number that high be a surprise, and that is when many S/X owners have the money to rather buy a performance AWD version.
I think BMW could only wish 30% of 5 and 7 series owners bought a 1 series when it was released…

It wasn’t 30% of Model S/X owners. It was 30% of those Model S/X owners that had explicitly put down $1000 for a reservation for the Model 3. That’s why this is so surprising.

a) They clearly wanted a Model 3 – that is why they put down the reservation. And at the time they put down the reservation, they already had the S/X
b) they are much more likely to be able to afford a $49K car, as the S/X is much more expensive
c) Still – only 30% went through with buying the current option. I honestly would have thought it would be higher.

I don’t agree. I’m an owner and don’t plan on buying a 3 for a while, but if I did I would wait for the AWD and/or performance versions to come out. This seems to be a large sentiment on the Tesla forums.

Point taken.

However, what the article does not say is that 70% of Model 3 reservation holders who previously bought a Tesla car, have cancelled their reservation.

I think the most reasonable conclusion is that most people who already own a Tesla Model S or X, and also have a Model 3 reservation, are waiting for a wider range of options to come available before “pulling the trigger” on converting their reservation to an order.

Don’t you mean 2018 Nissan Sentra SR…

😉

If they already own a Model S or X , Why would they need to buy a Model 3 ? Makes No sense…Besides I truly believe that the Orders are dying off , People are Backing out . Tesla needs to change their Business Habits . Some people don’t wanna buy a car so that they can Get Trapped by the Seller For Parts & Service to the Point that the seller Owns you & Dictates to you.

You ‘truly believe’ that orders are dying off? Based on what? Your own feeling or lack of want of a Model 3?

Be careful mixing emotion with facts..

I Truly Believe it, Based On LOW Production Figures & the fact that New Model 3 cars are being Delivered to places outside of CA , Where they Should Not Be Yet, Much Much Further Ahead of Schedule Than Ever Predicted…JUST READ BETWEEN THE LINES ….. 1st 0ff…Most People Ordered The Cheapy $35,000 Version Which they WILL NEVER SEE“ …MODEL 3“WILL NOT“ Be as Much of a Hit as Everyone 1st thought because There Will Never Be a $35000 Model 3 Built & with more competition coming , People are either JUMPING SHIP or Just Fed Up Waiting and Cancelling their orders for the Car they will never Get anyway ,AND- If Not, By the time they build the Cheapy $35000 Model 3 will be a Price Hike & The Ones that have not cancelled , will cancel then ….. CHEERS !

I think your logic here is wrong. I’m a Bay Area day 1 line waiter, non-owner. I paid my $1000 reservation right around noon on 3/31 at a Tesla store with 50 miles of Fremont. Tesla still hasn’t opened the configurator to me, and there are thousands like me still waiting to even be able to order.

I’m a 3/31/2016 not-in-store reservation holder wanting to get the currently offered configuration. The demand is high enough that they haven’t contacted me yet.

The reason Tesla is staggering its deliveries is because they don’t want to overload California’s supercharger install base.

(⌐■_■) Trollnonymous

” Delivered to places outside of CA , Where they Should Not Be Yet”

So what you’re saying is, if they are already current Tesla owners and not live in CA, Tesla should not deliver to them till later?

I tHInk yOu ArE SMoKinG SoMe SerIoUS CRaCK!

“Based on” a funny feeling in his toes, perhaps? 🙄

“Lamata” has been making a lot of Tesla bashing posts lately. My assessment: Information content of his posts equals zero.

As far as employees go, I think the lack of configurations is the biggest factor. I don’t know the annual salary of the average Tesla employee, but I imagine it is better suited to a sub-$40k car.

As far as existing owners – the Model 3 is inferior to the X and S in a lot of ways. As it should be! It is significantly cheaper.

I am sure there are reasons for an S owner to pick up a 3. But in most respects it would be a downgrade. Once the short range version is out, the Model 3 should justify its smaller feature list with a smaller price. 🙂

As Elon Musk put it almost 1 year ago today:

“Am noticing that many people think Model 3 is the “next version” of a Tesla, like iPhone 2 vs 3. This is not true.”

(Oh, plus lots of people waiting on AWD.)

The Model 3 is a smaller, less capable car, with less features and performance as the Model S. Why is it a surprise that there’s folks that aren’t really enchanted with the Model 3?

I think folks may be confusing ‘newness’ with ‘better.’

So why did those same people put down a reservation, then not cancel it?

To transfer it to the deposit for the Model Y that they would rather own.

I think a lot of reservation holders put down the reservation on a whim just to have it as an option. I expect a lot will not follow through.

I am very enchanted with Model 3 , the only things I do not like is the Fact that after you buy any Tesla .., Tesla Will Own you ! They will have you by the Short & Curlies ! You Cannot buy Parts , You Cannot let anyone else repair it but Tesla . These are Dictatorship Business Practices That Most people Will Avoid…Most people will NOT Pay TO BE Trapped into a Situation….THIS IS NOT GOOD For the Consumer …

Um, no. It’ll take some time, but parts will be available 3rd party, just as they are for hybrids. Fortunately EV’s have far fewer moving parts than an ICE and less likely to break down.

Why would this be a surprise? My guess would be they are waiting for standard range or AWD/Dual motor or Performace version… heck they may be waiting for a non-black interior.

A 30% conversion rate sounds pretty high given the limited option being offered at the moment. The article tries to make it sound like Tesla isn’t able to sell the model 3… when reality is they can’t make them fast enough.

It goes deeper…

You get the config invite email…You can only get one, the middle of the pack…Can only purchase…

Maybe I read it wrong but it’s not 30% of ALL model S and X owners but 30% of the S&X owners that did make a reservation chose to go through with the purchase.

30% of ALL model S&X owners would be very good, if you already have the more expensive car why would you buy a cheaper one?

Thanks. I adjusted that wording for clarity.

It means that those reservation holders are backing off to buy Model 3 for various and understandable reasons. Quality sucks!

That’s not what it means at all.

Most of these reservation holders are holding off on converting their reservation to an order, probably because the option(s) they are waiting for, such as dual motors, are not yet available.

If what you said was true, then they would be cancelling their reservations, not merely holding them for a later date. There is no indication here of mass cancellations.

Another Euro point of view
Well, if you announce a car for $35K and then it appears that the base version is not yet available for what it seems like a full year (I believe more) and that on top of it there are some quality issues, then, as one could expect, many reservation holders do wait a bit before pulling the trigger. No rocket science. There is a lot of non sense going on with all matters around Tesla, that for a long time now and it becomes more and more irritating because so obvious. I mean it was blatantly obvious the quality issues & the price issue would come. Quality issues because of obvious corner cuttings that were communicated in advance by Tesla so that anyone with a bit of car industry experience could predict this back in early spring 2017 (and they did for those with enough of a curious/critical state of mind to read this material available on the net). Price issues because there is a well supported track record of that in the past and that of course it would have made considerable less headlines & reservations to announce a mass market electric car that would cost well, $45K. How… Read more »

+🖒👏👏👏👏

Slight correction: it’s a $50K car, not $45K. Both the $9K Long Range option and the $5K “Premium Interior” are mandatory, and any other color than black is another $1K .

BTW, re the last one:
Additional cost for special expensive paint is common, but I’ve never heard of a car offered only in standard color where _any_ other color costs more, and even then, a $1000 is about twice the surcharge even for special paint in mid-price cars”
(The Ford Model T doesn’t count — you couldn’t get any other color (-: )

The only thing that is “blatantly obvious” here is that you’re a die-hard anti-Tesla FUDster who will write anything, no matter how untrue, in an effort to tear down the good name of Tesla, a company which is trying hard to make the world a better place.

Tesla good name 😂😂😂😂😂😂😂

Some people may also want to wait until the production is running fully automated. I don’t like the idea of a hand assembled battery pack. People can’t be trusted. Machine work is much better.

Waiting on black headliner and white seats.

Perfect configuration would be AWD with small battery.
Reason: Living in Austria, a few meters up a hill. 😉

I think the major reason for the relatively low buy rate is options are not available. Few people want the long range, premium interior in black. Many are waiting on dual drive, sort range and/or the standard interior. So it is very hard if not impossible to read anything into the numbers at this stage.

If the analyst’s numbers are right, then that means that fewer than 3500 employees have reserved/bought a Model 3. Given that Tesla has over 37000 employees, that implies a percentage of under 10%, which looks rather low. (This doesn’t count any SpaceX employees, or the effects of turnover.)

And what percentage of those employees salary is high enough to afford the 49K version of the M3 that don’t already have an S or X?

The “under 10%” is for all trim levels, including $35K. Less than 5% bought the $49K version. In any case, California buyers are getting $10K in tax credits to offset the price, so that $49K looks more like $39K, and even lower if you account for gas savings like Tesla does on their website.

39K is still a lot for a car. That’s close to double the cost of a lot of mainstream automobiles. The Tesla factory workers probably aren’t paid that well either. I expect their salary is more used Nissan Leaf territory than new Tesla Model 3.

To put it in perspective how many employees make the income to afford $600-$900 monthly payments depending on down payment? (Assumes $59K price with AP, doesn’t include approx $5K sales tax, 3% for 72 months). Under 10% of employees would seem about right.

And not even any lease options to soften the blow of the monthly payment.
I’m curious what % of reservation holders planned to lease their 3.

I didn’t realize that! (being in a country where there currently aren’t any Teslas anyway, I didn’t check out the financial aspecs)…
Since apparently ~80% of non-Teslas are leased (full data isn’t available on Teslas)
https://insideevs.com/nearly-80-of-electric-cars-minus-tesla-are-leased-not-bought-in-u-s/
and you hear lots of people in the comments on InsideEVs saying they wouldn’t outright-buy an EV in this early-adopter phase of the products, that has to be a rather important factor.

Tesla does not offer in-house leasing, but is there some reason people can’t arrange a lease through their own bank or credit union? Isn’t that a fairly standard option for auto leasing?

Whos a good leasing company that is able to take the $7500 tax credit into the payments

I’m a recent S owner that had a Model 3 reservation from April 1, 2016 and recently became eligible to configure but decided to wait. I got to test drive a 3 yesterday for the first time and 3 things put me off that I would like to see addressed. 1. Wind noise from windshield area, 2. Road/tire noise, 3. Single touch screen to control almost everything, lack of tactile controls that can be used without having to look at them. I would also prefer AWD but if the other things were better I might have moved on it. If the tax incentive goes away before these things are resolved then I will just cancel my reservation. In all fairness I am comparing this car to the model S and the Hyundai Genesis I had before.

I think this is the predicament most Tesla reservation holders are going to be in. 25% of employees, 30% of existing Tesla holders and possibly 50% of first day reservation holders will actually take the “unconfigurable” option.

This means
a) Tesla will go through the reservation list much quicker than thought
b) There will be lots of confusion when they open up the other configurations
c) Those hoping for base 35k model are not in luck
d) Some of those at back of line will have a shot at 7.5k federal credit

Because they already have a car?

Those who can configure do not have to decide now. They can configure at any time.

There are months left of the full tax credit.
There is as yet no AWD and no performance option.

The percentage that actually matters is _cancellations_. Those are the people who _definitely_ aren’t going to buy.

Indeed, that’s the interesting number, but of course, we don’t know. I do know people who have canceled, to buy a Bolt or in Europe, a Ioniq (in Europe).
There were certainly people who reserved although they thought there was only a 10% chance they’d want to buy the Model 3, simply to keep options open. Some ofthose haven’t canceled yet, but expect to do so within the next few months.

I find issues with organizations that do not explain their data sources, and then the bulk of their article is speculation. It’s just not useful, or actionable data.

What I find more interesting is the number of people I know who said they put down for a Model III reservation, but actually didn’t do so and were just bandying about it. Can I say something like 90% of all Saturn Ion drivers want a Tesla Model III but are still too broke to reserve one?

We own a Model S (my primary driver) and pulled the trigger on a first production Model 3 in January to serve as my wife’s daily driver. We actually wanted the all wheel drive version, but the lease was up on my wife’s BMW i3 so we needed a car before the all-wheel drive Model 3 was ready. But we did put in a second Model 3 reservation and plan to sell the current Model 3 once we have the all wheel drive version. I’m betting the resale value will still be pretty good on the first production model 3 as long as there is still a substantial waiting list.

If we didn’t need the car so quickly, we would have waited for the version we really wanted. I bet a lot of other Model 3 reservation holders are in the same situation. I’ve also talked to several reservation holders who are waiting for the white interior to be available.

In my opinion, the logic is quite simple. 1000$ isn’t a great deal of money for an MX/MS owner. Thought process of an MX/MS owner would be if the car is good I take if it isn’t I don’t. Apparently, 70% of Model-S/X owners do not find M3 too attractive.

Potential reasons being:
– Some people expected M3 to be better than MS but it is not the case (intentionally done by Tesla).
– It is a matter of taste but the interior is a bit like….. IKEA?? M3 interior and ergonomics don’t look like a step forward in comparison to MS/MX interiors (themselves not perfect) – quite the opposite. A cheap little VW Golf looks like Rolls Royce in comparison.
– LR RWD M3 Premium doesn’t make much sense as a second car but Short Range would do.
– The supercharging network is not that important for a second car because there is MS/MX for longer trips.
– Hatchback form would be useful….

Another Euro point of view

…an wind and road noises apparently according to owner of Model S who commented about it here above.

We have a Roadster, Model S, and Model X and are simply waiting for AWD performance configuration before we pull the trigger.

It’s your winter beater, isn’t it?

Many good points, on configuration and available options including starting price. Will also mention that timing is a huge wildcard as well. Few people will be buying a car when they don’t need them. Some will wait til they can sell, pass on, or their lease expires before buying a new car. When someone reserved their 3, they didn’t quite know when they would get one.

My M3 reservation window is Apr-June. We have a Nissan Leaf up in Jan 2020. However I’m assuming the tax credit will reduce after Q3 or Q4 and intend to buy the car a full year prior to the lease being up due to the tax credit benefit.

This is all total nonsense. I believe people are still pushing the line that Tesla has a demand problem. Tesla has plenty of problems/challenges but demand is not one of them. Meanwhile the crowd sourced data on the model 3 owners club spreadsheet says 76.9% of invites have been converted with almost identical rates for owners/non-owners. Perhaps not the perfect sample as it is self-selecting from the enthusiast crowd but this really is a silly article.

Thank you for that hard data! That is much more useful than the idle speculation in this article.

I was reported in previous years that Model S reservations had a ~25% cancellation rate, so the figure you reported here is not at all surprising.

That is still a small sample size and not scientific

That’s like going to an NRA rally and reporting that 100% of people do not like gun control

I think the day one reservation holders will have a high conversion rate. They knew enough about the car to get in on the first day, so they have to be pretty hardcore. It’s further down the order book that you’re going to see a drop off in actual buyers, especially if/when the tax credit expires. Also if Tesla doesn’t get their ass in gear they’re going to hit 2020 when a ton of potential competitors will start to become available.

Clearly the 3 will fail, its a piece of crap, and no one wants it:

other than over 567,000 on the waiting list! There never has been a car so highly anticipated and with so many pre-orders. Let’s get real here folks.

“Surprisingly, Most Tesla Model S and X Owners Haven’t Opted For Model 3”

What a very odd opinion. Would anyone have thought it “surprising” if most BMW 5-Series owners didn’t run out and buy a 3-Series when BMW started making that car, as I presume they did not?

Does this InsideEVs’ editor think that Tesla owners are so loyal to Tesla that they think they have to buy every new model released… a “Collect them all” mentality? Admittedly a few of the more ardent Tesla fans posting to the Tesla Motors Club forum write as if they plan to do exactly that, but I think it’s reasonable to think that is a rather small minority of Tesla owners!

So True. I want one as a second car to our S. I have no disillusion that the 3 will be “better.” I am lucky and have the luxury of being able to afford two expensive cars. I want the Model 3 because it will be a more nimble,casual, and tossable version of our S which is the best car I have ever owned.

I am seeing about one M3 per day now, all with new car licence plates. Even with increased production, its going to become apparent that if you are not already on the waiting list you are hosed as far as getting a car in a reasonable time.

+1

Even if you *are* on the waiting list that could be true.

I am not surprised by this. I am waiting for the D version and short range version. Neither is ready for test drive or configuration.

That is the key here. I believe many of the reservation holders like me are either waiting for the D version or the base version. So, the RWD LR version might be the smaller portion of the buyers thus lower take up rate.

Of course, eventually as we get close to exhaustion of tax credits, then some of those waiting might be forced to change their mind and jump in. Until then, many will be waiting on the side until more options are available or more features are added/bugs worked out.

I don’t believe people who have Model S/X will be “rushing” out to get an early Model 3 at this point. And for those who don’t have Tesla Model S/X, they will be more likely be waiting for the base version anyway.

Article title: “SURPRISINGLY, MOST TESLA MODEL S AND X OWNERS HAVEN’T OPTED FOR MODEL 3”
———————-

What would be more surprising to me is if the majority of Tesla S/X owners (that have a Model 3 reservation) choose to order the current limited configuration.

As the article points outs it’s unknown how many reservation holders are waiting for a wider selection to open up such as the lower price version (college kid car, 2nd sometimes use car, girlfriend car)… or higher priced dual motor performance version (snow, desire performance, better range)… or something other than a black interior (must have that Tesla white)… or letting the first production wave to roll through to get initial production bugs worked out (no secret that Tesla continuously improves their cars each week).

I’m thinking the biggest wait factor for many reservation holders is to learn what the added cost is for dual motor and what added performance to brings to the table.

Pu Pu is rational today. Hold me. I’m scared.

So current AWD Tesla owners are waiting for AWD Model 3’s before finalizing their reservations?

Somebody is surprised by this?

I’m not sure what the fascination is with the reservation holders (aside from being the all-time record for the most paid pre-purchase reservation holders for any product ever sold).

Tesla got something like 14,000 reservations for the Model S, and then went on to sell around a quarter of a million of them so far.

Reservation holders will likely be a single digit percent of total Model 3 sales over the long term.

Model 3 will probably be more popular in Europe where they prefer smaller cars. Otherwise, there is little reason for a Model S owner to opt for a Model 3 other than a 2nd car.

The Model Y though may see much larger sales amongst owners who seek a CUV for city driving.

Reservations are good for the 220 mi range cars, AWD, Performance model and the upcoming Model Y. This article is premature.