Should Tesla Cap Model 3 Pre-Orders?

2 years ago by Tesla Mondo 77

Tesla Model 3

Tesla Model 3

Tesla Model 3

Tesla Model 3

TESLA SHOULD CAP MODEL 3 PRE-ORDERS

Nobody likes traffic jams, or crowded airports, or busy supermarkets. We use the term “cattle house” to describe the feeling of being dehumanized in herds.

In the interest of preserving what’s left of Tesla’s unusual intimacy with previous customers, and preserving any chance of a positive introduction for newcomers, Tesla should freeze pre-orders at 400,000 and then re-open the pipeline after the first 200k units are delivered.

Mutual funds sometimes close to new investors temporarily, for a host of good reasons. Want a more relevant example? Car dealers sometimes turn customers away if they know they cannot deliver the product in a timely manner. It doesn’t happen often, but it happens. Taking a deposit with no clear path to filling the order only guarantees agita later.

In its short life, Tesla has established good rapport with customers. That’s a precious thing in the auto world, where smarminess is the default M.O. from the retail level all the way to corporate HQ. But letting Model 3 orders outstrip, say, three years of production threatens to erode that rapport by making people feel like livestock. It also makes Tesla look overwhelmed, even if it’s not yet. Tesla should look confident at all times, not overwhelmed.

*Editor’s Note: This and other Tesla-related posts appear on TeslaMondo. Check it out here.

Tags: , ,

77 responses to "Should Tesla Cap Model 3 Pre-Orders?"

  1. John says:

    I’m unrealistically hopeful that Tesla will do everything in their power to ramp up production faster. I doubt they expected this level of interest, and I hope they don’t squander the momentum.

    1. Speculawyer says:

      Yeah, I really don’t think they expected this. I don’t think anyone but the most rabid Tesla fans did.

      They probably knew the demand was strong but . . . people camping out at stores, 115K orders BEFORE THEY SHOWED the car, 325K in first week . . . who expected that?

    2. Agzand says:

      This car is supposed to sell 400k a year by 2020. Why do you think 400k reservations are too many? If they convert 75%, that is 3 quarters of production. Contrary to what you hear I think they expected reservations in millions. 400k was probably a disappointment.

      1. przemo_li says:

        Trololo.

        Not a single Model 3 competitor sells in millions.

        To get that much in sales, You real need to get 2-3 classes down.

        Tesla witch such reservations will troll every competitor when their capacity match the demand.

        But millions?

        Its similar to the iPhone fans claiming that next year Apple will have 100% of the market.

        NOT GONNA HAPPEN.

        Luxury segment is rich man toy. 😉

        400 000 reservations though will really help Tesla to acquire funding and financing for the gigafactory. They planned “slow” ramp up, but maybe they will be able to push it faster. Before hand it was funding limiting progress. Now? Who knows. Maybe Tesla will be limited by amount of workers who can work on gigafactory at once 😉

        (Ok. More realistically, it will be 3rd party suppliers who will have trouble hurrying up their plans – gigafactory after all wont be just for Tesla)

        1. agzand says:

          Having $400k reservations doesn’t mean they will sell $400k cars every week, or every month, or even every year. This is a one time thing due to introducing a product that doesn’t exist at this time and has a big pent up demand. The question is whether they will have a sustainable demand of $400k cars per year for the next 10 years or so, and whether they can deliver these cars at $35k profitably.

  2. Speculawyer says:

    Meh . . . they are refundable. No need to cap them.

    It is self-regulating.

    1. alain says:

      i agree ,feel fine to leave at anytime,people know what to expect in a pre-order,they know from the start.it good for tesla to see the demand to make production for the demand.

      1. sven says:

        People don’t know what to expect. For the Model X, Tesla is making and delivering higher-trims for people who didn’t put down a deposit and just walked in off the street in 2016 and ordered in 2016, while those who put down a $5,000 (some $40,000) deposit years ago are told their Model X will be delivered in the second half of 2016. Those Model X deposit holders are not happy. They thought their $5,000 deposit years would ensure them a place in line ahead of someone who decided in 2016 to buy a Model X.

        The big question is, will Tesla do the same thing for the Model 3, and allow people who didn’t put down a deposit last month to purchase a Model 3 (and possibly get the federal tax credit) before all the people who put down a deposit get a chance to buy their Model 3?

        1. Mike I says:

          I already know that if I want a relatively base trim Model 3 that someone will be able to swoop in and get a loaded one before me. That’s just how it works. Early deposit holders will see the delivery implications of their trim level choices when the time comes to confirm orders.

          1. Nano3D says:

            That’s seems unfair, this preorder thing looks more like a huge crowdfunding more than anything else.

        2. zzzzzzzzzz says:

          It isn’t a question. It was told load and clear by Tesla that expensive high trim versions will be done first regardless of your line number. Tesla is not charity and is not picking dollars from trees. They can’t make ends with $100k cars, how do you think they would be able to invest billions (that they don’t have) and go straight to $35k car production?

    2. SparkEV says:

      While that’s true, people sometimes don’t gauge the risk well. Mutual fund in article is a good example; people can pull out anytime, but the managers can better gauge the risk. Tesla should better understand the risk; having it 500K or even 1M preorders only to have delay after delay or “alpha test” using large number of production cars won’t be good.

      I think a self imposed cap is a good idea. Even current number is way high, and attrition could make it bit lower. In addition, something harder to get will only add to the desire to have it even more.

    3. SJC says:

      18 months from now only a small percentage will get the tax credit, then we may see reservations canceled.

  3. jelloslug says:

    Nope.

  4. David Murray says:

    nope. I want to see orders reach a million!

  5. Rob Stark says:

    Deposits are refundable

    And Tesla has reported reservations and rollout plans.

    If you reserved on March 31 in CA you can expect your car in 2018.

    If you reserved today in India probably not til 2020 at the earliest.

    Not soon enough? Don’t reserve or cancel and get your money back.

  6. wavelet says:

    Who cares? Why is this interesting?
    As long as Tesla isn’t making claims they can’t meet (and they’re not — they’re not committing to any hard delivery dates/numbers), why not allow people to reserve to their hearts content.
    I happen to think offering reservations before there’s a final, full spec of the car and driveable demos is sleazy business practice, but at least 400K people disagree with me (-:

    Recall also that at any point in the future Tesla can decide to cancel any reservation by anyone, and refund his/her deposit, if they decide production is going to be unreasonably delayed.

    1. floydboy says:

      There’s nothing “sleazy” about it.
      The reveal is to gauge interest, see what the public likes/dislikes about the vehicle and make changes accordingly. Nobody brings out the final product on the first showing of a new car.

      1. wavelet says:

        The “sleazy” (IMO) of course refers to taking people’s money years before a product is available (and not because of unforeseen production delays). Tesla is explicitly charging people deposits to reserve a car, and not “to gauge interest”. This is not a focus group.
        The sleazy aspect also refers to not committing to anything in return.
        But again, 100Ks of people obviously disagree…

  7. Carcus says:

    I think capping the pre-orders as suggested would be prudent. It could help provide a positive stabilization for the company and the stock price along with establishing/preserving quality of the product.

    1. carcus says:

      p.s. If Elon’s got any more business questions, he’s got my number.

    2. Trollnonymous says:

      I still think of the numbers in the queue, it will result in just 50% in actual sales/deliveries.

      Still a damn good chunk though for a first Generation product.

  8. Spider-Dan says:

    “Should Tesla start refusing free money? Find out in the article below!”

    1. Pushmi-Pullyu says:

      ROTFL!

      Spider-Dan, you just made my day. Heck, my week!

      😀 😀 😀

    2. Mister G says:

      $400 million free so far…I gave Tesla my $1000 LOL

    3. TomArt says:

      Haha!! Good point.

  9. Anthony says:

    I don’t think they should close the line, but at the same time they need to be up front with the people just getting in line now.

    At almost 400,000 units, I figure that is the first two and a half years of production. (50K, 150K, 300K) By the time it launches, it may be closer to the end of the third year of production (between 750k-1m reservations).

    What Tesla needs to do is make it more clear that those making reservations going forward will not likely make the cutoff for the tax rebate as the law stands now. It is important both for Tesla to avoid negative publicity if/when people cancel when they find out they don’t get the rebate, as well as for consumer to be treated fairly in being told up front they have probably missed the cut-off.

    1. GetinLine says:

      And how do you think they can do that. Only way to guarantee getting your full $7,500 tax credit is to buy a model S or X now.

    2. wavelet says:

      Tesla are being very upfront; just read the reservation agreement. They’re not committing to actually producing a car, to selling one to any specific reservation holder, to any specifics of the car (including price of the car itself or any options), or to any delivery dates.
      They’ve published the guidelines they’ll use to determine delivery ordering, but it’s not a contractual committment, and neither it doesn’t determine any specific delivery date for any specific reservation holder.
      Anyone reserving a Model 3 does not have any concrete rights as a result (except deciding to cancel and being refunded the deposit).

      1. TomArt says:

        Well, many people don’t read agreements, but Musk has put out Tweets to the fact that you are going to wait. They’ve had interviews and press releases stating that the deliveries will prioritize to previous owners and higher trim levels, by region, from West Coast to East Coast, then exports, then RHD, if I remember correctly.

  10. EVA-01 says:

    I still don’t consider “putting down a deposit now to order something later” a preorder. It’s more like paying for a place in line to order.

    1. Trollnonymous says:

      It’s a Disney “Fast Pass’……lol

      1. zzzzzzzzzz says:

        It isn’t “Fast Pass”. “Fast Pass” will be to order all possible options and pay some $60k or $70k for Model 3. Don’t claim that Tesla promised you a spot in line just for $1000 – they told the opposite.

    2. TomArt says:

      Right – it’s a reservation.

  11. Ed Makin says:

    I ordered mine knowing it will take a couple of years. I ordered mine on Apr 2nd and assume that it will be 2019 before my car is ready. I will be surprised if I get it sooner. Also, I never heard of Tesla before. I just happened to see a YouTube video when someone mentioned this car. Out of curiosity, I google it and found the launch video. After a day researching more, I thought, what the heck. . .never knew they made cars this neat and ordered one. When I mentioned it to my daughter in college I ordered one, she and all her friends knew about Tesla and didn’t believe me that I had actually reserved one. She knows I am a tech retard constantly calling her to fix my smart phone because of something stupid I had unknowingly done. She hopes I can’t drive it and will end up giving it to her. ha ha ha ha.

    1. Jychevyvolt says:

      Welcome to the EV community.

  12. Benjamin says:

    TESLA TESLA TESLA! This website is becoming just a blog post for Tesla. This site should be called InsideTesla.

    1. Fabian says:

      I guess that can happen when all the other big brands, save GM, are sticking their collective heads in the sand.

      When the Bolt was announced at CES, some would say this site was the InsideGM site for a bit.

    2. Pushmi-Pullyu says:

      Yeah, InsideEVs really needs to stop posting all those articles about EVs from GM, Nissan, BYD, Volkswagen, and all those “fool cell” car articles. Also, they should stop all the articles about battery tech, Formula E racing, wannabe EV makers like Faraday Future and Karma, and everything else not directly related to Tesla Motors that’s cluttering up this website.

      (Sarcasm? What’s that?)

      1. TomArt says:

        Priceless.

      2. Michel says:

        The articles from insideevs are good . That on the comments side that turn ugly whe the Tesla fanboys attact all thy other products.

    3. Jychevyvolt says:

      Where’s the coverage for LeEco LeSee?

    4. Forever Green says:

      Benjamin, I would rather talk about Tesla who is leading the charge towards a cleaner sustainable Transportation future, than Volkswagen who epitomizes the failures of the past.

  13. ffbj says:

    Well they already hit 400k, with orders being open for less than a month. I would think at 500k they might want to think about closing orders down. They will probably get there before Summer.

    Of course since orders are places in line and someone can cut in with more options and better positioning, near CA, plus current Model S/X owners also get preferential treatment, it might be best to leave orders open as it may cause those people to choose a higher option vehicle, to get closer to the front. An ingenious and somewhat insidious methodology for placing customer orders in a que.

    1. TomArt says:

      Interesting point.

  14. Forever Green says:

    Let the good times roll! I made a deposit about a week ago knowing I’m not going to get my model 3 until 2019 or 2020. No problem! I’m glad no one cut me off and I don’t think Tesla should stop anyone from reserving their place in line.

  15. Pushmi-Pullyu says:

    TeslaMondo does make a good argument for capping orders.

    On the other hand, I personally hope Tesla doesn’t cap them, for purely selfish reasons: So I can point at the latest number and laugh at the few remaining Tesla short-sellers who are still foolish enough to waste their time posting anti-Tesla FUD in online comments!

    1. Anon says:

      I do think you’d create a huge media frenzy over this car, once you cap reservations, until such time as they can meet demand.

      In the meantime, Tesla will show the other bits of the vehicle: new battery layout / cooling / heating and the “spaceship-like” control system for the interior.

      Never underestimate the demand for something, once you can’t have it anymore.

      People will go MAD, waiting with baited breath, for Tesla to finally give the word that they can once again, reserve a Model 3, as the production line ramps up. And in that time, perhaps the Crossover based on the same Model 3 platform will be shown as a prototype…

      The floodgates to pent-up demand for reservations would be absolutely HUGE.

  16. HVACman says:

    No, but the media should cap Model 3 pre-order updates.

    1. TomArt says:

      Funny – however, they are only reporting what Tesla releases, and they haven’t released anything except what Musk promised via Twitter: 24-hr total, 3-day total, 1-week total, and then there was that presentation where a Tesla exec mentioned the most recent total of about 400k. Musk will tweet the 1-month total, if I remember correctly, and then that’ll probably be it until the quarterly conference calls (they might stop reporting after a while, like they did with Model S reservations years ago). Then the media will just keep repeating the most recent number ad nauseum.

  17. Delta says:

    If Elon anounces a cap of 500 000 , it will start a stampede to get in line and be filled in a couple of hours! It would end up being another free publicity stunt. He could do the same thing by setting a closing date.

  18. Alain says:

    This car will out sell BMW 3 series and thé c class of MB.

    1. It might if Tesla could make them fast enough. I doubt Tesla will be able to scale up that quickly. It took them 3 1/2 years to make 100,000 Model S cars, and for the much of that time they sales were constricted by their supply. Now we expect them to magically expand to fill 100,000 orders a year? Even if they do they have 4 years of sales in the bank. This isn’t going to be easy

      1. Jychevyvolt says:

        The truth hurts.

  19. Richard Butler says:

    If people want to pay a refundable deposit to get in line to possibly buy something in 2 or 3 years, then why stop them?
    We don’t even know what the spec and prices are yet, and people still want to hand over their money.
    I paid on the 1st of april.
    I hope to be able to be able to afford a mid spec 4wd car, if not, I will have to get a refund and join the queue for the next model instead.
    Either way, I don’t care about the cut off date for the tax rebate. We have different tax incentives in the UK.

  20. Will Davis says:

    Not at all. Big numbers are good publicity, and the deposits can go towards orchestrating the production ramp-up. Yes, they CAN spend our deposits.

  21. ModernMarvelFan says:

    No!

    We need the number to go as high as possible to show the rest of the industry that demand is there.

    I am tired of hearing their excuses that nobody want them so the sales numbers are too low to justify the profit.

    Now, Tesla will prove that there are real demand and you can make profit on them.

    I want the number to go as high as 1 million!

  22. Mxs says:

    Don’t close it … Because insideev will have nothing to write about for the next two years before customers start asking for their car ….

    1. Jay Cole says:

      …the bear is poked without provocation for an unprecedented 87th time by Mxs, and yet the bear still does not take action. One can only sit in wonder with anticipation for what will ultimately spur the bear into action, and that final climatic scene to our saga…

      1. ModernMarvelFan says:

        Bear? I thought you are Canadian, not Russian. =)

        A Moose, maybe? =)

      2. Mxs says:

        Your record keeping system must be way off. If I have posted 40 times it’s probably too many times.

        But I can see how that can get under your skin. I am just telling you how I see it from outside, not having a stake in ICE nor hugging any nearby tree.

        1. Anon says:

          Feel free to hug some electrons, instead.

  23. Anon says:

    Kind of important to extend the Federal EV Tax Credit. Please help sign this petition:

    https://petitions.whitehouse.gov/petition/increase-ev-tax-credit-cap-manufacturer

    Broadcast this to all your social media peeps. THANKS!!!!

    1. Nate Bucks says:

      +1

      Good to put the word out. I already signed that when I saw it on Model3ownersclub forum, but the numbers are not growing that fast.

      Jay maybe insideevs could post write something simple and put in the story queue here?

      1. Anon says:

        I suspect there is some weird psychology in regards to people WILLING to take an existing EV Tax Credit at time of purchase, but NOT try to extend it, due to conservative media influence against “subsidies”.

        This is an example of the majority of people often acting against their own best interests.

        But look at it this way– as long as the Fossil Fuel Industry still gets subsidies of a trillion a year, EV subsidies are a mere drop in the bucket. Beut we get much more in return as a result; better health, better future, better vehicles.

        Remember– once you burn fossil fuels, all you have left are nasty emissions.

  24. Terawatt says:

    I consider my reservation as my small way to help Tesla by giving an interest free loan and showing how strongly interested I am in the product. I realize it’s not clear when I can buy a car or on what terms. I also realize there’s a chance Tesla fails, goes bust, and I lose my deposit.

    I think for a lot of reservation holders it’s a bit like it is for me. We are willing to make some exceptions for an exceptional and hugely important company. It would be very silly for Tesla to stop taking reservations, but a good idea to communicate as clearly outside of the agreement as in it that you’re not so much buying anything at all as you’re helping out..!

    1. TomArt says:

      That’s about sums it up, yes.

  25. Apkungen says:

    I dont agree. Imagine the enormous line that would pile up the day they would reopen the lines again. I think this is a fair way to do it. Maybe they would even have kept the Signature reservations?

  26. jmac says:

    How the heck is Tesla going to make all these cars in a timely fashion and at a profit ? Big challenge for Musk and Co.

    On a positive note, the large number of Tesla deposits has surely demonstrated to the other auto manufacturers that this Electric Car thing may have some real legs – after all.

    We are doubtless already very close to 500,000 deposits for an EV that’s at least 2 years away.

    For the traditional, stuck in the mud ICE car company CEOs, the extraordinary interest in the Model III and large number of deposits must have felt like being “bitch-slapped” by the Eveready Bunny.

  27. Dr Dauger says:

    Of course no cap. It’ll level off on its own. If people want to vote their support with their dollars, like a massive Kickstarter, let them.

    I’d guess it’ll level off at 500,000, constantly churning. I have a Model 3 reservation.

  28. No Cap! I want to reserve a second one when the number is about 750,000 long!

  29. Why would they stop taking pre-orders? They have a list of serious buyers, and they get $1,000 from each person. That is the best kind of information they could have, and it will help them build enough units.

  30. Brave Lil' Toaster says:

    Or maybe they should just put their money where their mouth is, and get all their pre-orders out the door in the first 12 months of production. That will clear the queue right quick.

    The NUMMI plant has enough space to make 500,000 units a year, and that’s not even an overly optimistic expectation – the Toyota Camry sells in excess of 400,000 every year in America alone. The F-150 sells over 700,000 a year. 300,000 just means that you’ve hit the mainstream.

    1. TomArt says:

      Ha! I wish.

      Granted, this car is being designed for many things, including manufacturing efficiency – no Falcon doors, no self-adjusting headrests…just normal, fold-flat rear seats, etc.

      So far, based on the reveal, there is nothing about the Model 3 that represents tech or styling beyond what they have already developed and implemented in the S and X.

      They have 18 months to finish cleaning up S production issues and to fix X production issues. The lessons learned, and a stock offering or two, should enable them to ramp up production more than they anticipated, but nowhere near half-a-million units in the first 12 months of production.

  31. Rick Bronson says:

    As long as people are willing to put a deposit, Tesla can take it. Its just that more people are happy to wait for a year or two and this also gives them time to save some money to buy the Model ≡.

    Tesla sold more than 1300 Model S in China in March-2016. Probably a record.

    http://ev-sales.blogspot.com/

  32. Nix says:

    Cap it at 12 Billion.

    *grin*

    Seriously though, a cap will just distort the market artificially, and lead to stupid things, like people selling reservations on ebay for high premiums, and then azzhatz buying those reservations then buying the vehicles and putting them back on ebay at a huge markup.

    It is going to be bad enough already. A cap would make it worse.