Tesla Model 3 Reservations Surge To Over Half Million, Musk Says 6 Months Of “Manufacturing Hell” Is Ahead

JUL 30 2017 BY ERIC LOVEDAY 74

The most anticipated car (of all time?) now has more than  half a million people lined up to buy it.

Tesla Model 3 Event

That’s according to tesla CEO Elon Musk who told journalists on Friday that the Model 3 reservation tally had surged past 500,000 prior to the handing over of the first 30 cars at the event in Fremont.

Tesla won’t be able to fill all of those reservations any time soon though. Tesla is now asking mostly employees with reservations to go ahead and order their Model 3s now. Later on down the road, Tesla will open the ordering process to more and more potential buyers.

Reuters states:

“Musk took to the stage driving a red Model 3, and said Tesla has produced 50 of the vehicles so far, including 20 for testing purposes.”

50 is a long way from 500,000 and even Musk acknowledges that fulfilling all of those potential order will be “quite a challenge.”

Musk added:

“We’re going to go through at least six months of manufacturing hell.”

Let’s hope Tesla returns from this hell with the ability to crank out vehicles at a rate comparable to or higher than even the world’s most established, long-standing automakers.

Source: Reuters

Categories: Tesla

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74 Comments on "Tesla Model 3 Reservations Surge To Over Half Million, Musk Says 6 Months Of “Manufacturing Hell” Is Ahead"

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Even if they only make 250k pet year the backlog is cleared in 2yrs, which is still 2019 when other manufacturers are just hinting they might be selling something.
There won’t be any problem selling whatever they can make.

It is a manufacturing ramp-up. 50 – Jul, 100 – Aug, 1500 – Sept, 20,000 – Dec. You can fill in the blanks following the graph provided of roughly 5000 – Oct, 10,000 – Nov.
That will close 2017 with 35,000ish

December is shooting for 5000 Model 3’s per week. They are looking to achieve 10,000 per week by the end of 2018. That is at least the plan. If they pull the manufacturing hell plan off, they will achieve 300,000ish in 2018. Not saying they will or they won’t, just putting numbers to their curve.

“Only” 250k per year…

Doing 100k Model 3s in 2018 will be a pretty massive challenge.

++
Exactly. And after seeing the low demand (overall, globally) for the Bolt/Ampera-E, it’s not just a production issue: It’s not clear yet there’ll be a demand for 100K units in 2018. The actual price of a Model 3 comparable to typical mid-price tier midsize cars have is more like ~$40K — these cars usually have active safety features (lane keep etc.), and colors don’t cost extra.
Given the lower range and lack of a hatchback option with decent cargo capacity may be an issue.

I think demand is not an issue this year or next. People are hyped to the gills on this car. It’s really not in the same ballpark as the Bolt, which is a sporty economy hatchback compared to an entry level sport-luxury sedan.

The Motor Trend reviewer was almost delirious with praise for the handling of the Model 3, after his test drive (link below).

I think comparing the Model 3 to the Bolt EV is a mistake. It’s in a higher class, and frankly a more expensive one once you climb past the base trim level.

http://www.motortrend.com/cars/tesla/model-3/2018/exclusive-tesla-model-3-first-drive-review/

It is a mistake, but it’s one that GM brought on themselves, especially given the pricing.

Tesla is matching BMW 3 series pricing pretty closely. The Germans are the target. Jaguar and a few smaller firms play in that market as well. The sportier models from Lexus, Acura, etc. also sell to that market with a focus on value and reliability. Tesla won’t take much share from them.

Tesla will get some share from Prius and other hybrids as these eco-conscious buyers “graduate” to full BEV.

“The actual price of a Model 3 comparable to typical mid-price tier midsize cars have is more like ~$40K — these cars… colors don’t cost extra.”

For the BMW 3-Series, to which Tesla spokesmen have at least twice compared the Model 3, the only colors which don’t cost extra are black and an off-white. “Metallic” colors are a $550 upgrade, and premium colors are $1950.

Perhaps, Wavelet, you’re comparing the Model 3 to cars priced lower than Tesla’s intended market segment.

> It’s not clear yet there’ll be a demand for 100K units in 2018.

You’re assuming 400K+ pre-orders will disappear?

Many of them could as the tax credits ramp down.

Because people can’t do math and don’t realize that with 500K reservations and just ~100K residual tax credits + ramp down period they are just late for the party with any reservation number north of (just guessing here)200K?

It depends how many of the people ahead choose to back out. I have a high reservation and might not be in line soon enough before the tax credit runs out, and to be completely honest if the tax credit is gone, my reservation is gone too. The differential in price compared to a Bolt or next gen Leaf or Ioniq is simply too large.

As I’ve stated before, the setup of the tax credits is very unfortunate. It should have been a global pool, not a set amount per manufacturer, and it should have been a refundable tax credit. I’m wondering if someone involved in the legislation tried to intentionally sabotaged the credit to make it the least effective it could possibly be (there are certainly plenty of people in Congress who are in the pocket of Big Oil).

The way the tax credit is set up it eventually rewards laggards, the carmakers that have been sitting on their hands while the early adopters caused a supplier infrastructure to come into existence and EV part prices to fall. Laggards tap into that and unfairly compete with early adopters.

BTW: GM is slated to run out of tax credits in the same time frame as Tesla according to this insideEVs analysis:

http://insideevs.com/when-will-the-7500-us-credit-expire-for-the-tesla-model-3-and-everyone-else/

The difference is that nobody is reserving a Bolt so there is still plenty of time to pick one up that’s still eligible for tax credit benefits. Come trade in time you will get that extra $7,500 you paid for a non eligible Model 3 back though I’m sure.

Also, this probably isn’t even a situation where math is involved. A lot of potential buyers may not even realize the credit gets phased out. I mean, is that really common knowledge except among us EV enthusiasts?

Their accounting people should know.

I really wouldn’t worry about it. Demand is clearly not a problem, or if it is, it’s because it’s too high! In any case Tesla has plenty of scope to adjust prices, and I’m sure the autopilot features will come down. It doesn’t cost any more to let a user run this software than to deny it, the hardware is all the same anyway, and it will be more profitable to sell the software unlock for literally ANY price than not sell it. They are segmenting if the classical way – sell it at $8000 to the people willing to pay that much, then at a lower price to the next group of buyers, and so on. Just like they did with the software-limited 60s, where the price to use the hardware that’s already there fell from the initial $10k to $2500 in short order.

While I agree with you that it’s not clear at this point how much demand there is for EVs, I think the situation with the Bolt is more complex than you’re making out. There are long waiting lists for the Ampera-E in Europe. GM just hasn’t been sending the cars there. I expect they could easily match their U.S. sales in Europe, or maybe even see higher numbers, if they just provided the car.

Tesla obviously wants to sell a lot more Model 3s than that, of course. I am still curious whether the Model 3 may spur sales of other EVs (Bolt and Leaf) as word gets out there. Basically Tesla would serve as marketing for EVs in general, and as people look into them more they’d discover the other options.

It’s taken less than two years to amass the half a million reservations, so 250k is lower than the reservation rate so far. Whether the reservation rate goes up or down from here on isn’t clear to me – there are still lots of people who are just discovering EVs and Tesla. In other words, if the reservations keep coming as fast as they have, the backlog will increase, not “clear in just two years” as you imagine. Even if they come in a lot slower it is fairly pessimistic to assume ZERO reservations will accumulate in the coming two years. Consider how many more people, and in a different income bracket than now, will ride in a Tesla in the next year alone if 200k Model 3s are delivered! Nothing advertises and sells the cars like first hand experience with both the cars and their evangelically-minded owners. To my mind, the question is not of the demand is there for the product, but simply whether Tesla can manage the growth without breaking itself. If they ramp up according to the ambitious plan and don’t have huge quality problems I don’t think it’s crazy to say another half a million… Read more »

If it can make model s&x numbers combined 8k per month its a win.

Ford manages 1400 F150’s per day from its rouge plant.

One can always find a comparison that makes anything look bad, if one tries.

For example, Tesla has increased its sales by, on average, more than 50% per year since 2012. How about Ford? Not so much. Of course, that comparison is just as unfair to Ford as your comparison is unfair to Tesla.

I wonder how many reservations have been added or cancelled since Friday…

I guess we won’t find out for a long time.

I’m guessing quite a lot of cancellations. And perhaps even more new reservations!

Or if not more new reservations than cancellations after that comparatively low-key Reveal event, then perhaps there will be a surge of new ones after word of the almost delirious praise from the Motor Trend reviewer gets around. Presumably to be followed by high praise from other auto reviewers.

http://www.motortrend.com/cars/tesla/model-3/2018/exclusive-tesla-model-3-first-drive-review/

Easy on the Motor trend links dude, I think if a reporter is granted an exclusive like that getting to drive Franz von Holtzhausen personal car ahead of anyone else he is more or less supposed to write a rave review.

Doesn’t mean he doesn’t mean it but he might have been a bit more nuanced under different circumstances. We’ll see so how the rest of the media picks things up, let’s hope its another round of wall to wall rave reviews just like Model S got. So far there appears to be universal recognition that Model 3’s official release was a momentous occasion in car history.

Also to be fair, these reporters rant and rave about cars, but they don’t have to pay to buy them themselves. It’s always kind of funny when these guys are reviewing $100K cars and talking about how awesome they are. Yeah, if you buy a car that costs more than half of the median U.S. house ($188k) it had better be damn good! That doesn’t mean it’s affordable, or worth the price being asked.

Obviously the Model 3 is quite a bit more affordable than that, so it’s not as big of an issue. But, still, when you get to drive something for free you’re not going to look at it in the same way as if you paid for it.

Regardless of the reservation situation, I think the rollout will be slow with the higher priced, longer range cars continuing until the market gives out. I have contemplated a reservation myself as I think the pricing has opened up the opportunity to get a car sooner for those willing to pay. I think the $49,000 price tag for spec cars has reshuffled the deck, if you will.

I was one who really thouught they would offer the $35,000 base car first as a bone for their loyal supporters. I was wrong. Clearly, they are putting profit first. That means CARB states will get the first cars as they generate higher profits due to the ability to resell credits. I also think they will feed the rest of the US first due to the expiring tax credit. The next six months will be very interesting.

“I was one who really thouught they would offer the $35,000 base car first as a bone for their loyal supporters.”

If you thouught that, you must have been ignoring absolutely everything being said by Tesla for the last 2 years. Because that was not the expectation that they set.

The base $35K car is scheduled for November, which is actually SOONER than most folks who where actually paying attention thouught it would be available.

In fact, some of the whiners said they would never build one, or wouldn’t build any until after the federal tax credit had sunset. Those folks were even more wrong.

Really? Judging by the wailing and nashing of teeth by the Tesla faithful, I would say that many had that expectation. Only a Tesla apologist like yourself would say otherwise. Go back and watch the launch video and how much emphasis was placed on the $35,000 price tag. Tesla delivered a $50,000 toy for the rich. Given their track record with the Model S, I doubt we will see a $35,000 3 in the Fall.

My question is that why would you think that? That is the exact opposite of what Tesla said that they were going to do.

Model S and Model X sales should see increased sales as well. Good news for Tesla.

Why do you think that? I’m guessing the opposite will happen. Model 3 will cut into S and X sales.

Can you point to a similar situation happening at an other auto maker? When BMW put the 3-Series into production, did that cut into 5-Series sales?

I think not!

Sales of a lower priced car help draw more people’s attention to the auto maker’s higher priced “halo” cars.

People that are in the market for a $100k car are not cross shopping $35k cars

500k reservations is crazy good no matter how you see it. Sure not all of them will eventually result in sales but even if only half of them will it’s still amazing for a car not yet produced.

If this doesn’t wake up the rest of the industry I don’t know what else will. If you make a compelling car people will line up to buy it. The problem is I guess a lack of imagination and foresight among the incumbents, they are too scared to try something radical in case it should result in a temporary dip in profits, despite it being more beneficial in the long run.

The legacy car makers must learn that they have to push forward, not just be a “me too” manufacturer to win.

Bad news for the shorts, who are about to keel hauled fore to aft.
I predicted as much, regarding the 500k orders a few months ago. Not really all that surprising. The often threatened “Tesla Killers” were, after all, just a cute phrase.

I bet you that TSLA stock is going to end DOWN tomorrow.

I would guess that you literally are betting on that… by short-selling Tesla stock. That would explain your serial Tesla bashing; you want Tesla to fail.

The reason it could end down tomorrow is due to Elon Musk talking about production hell. For stock market, this is just a numbers game. As for the car itself, I think tomorrow we should see the BOLT prices come down.

GM doesn’t want to sell the Bolt, so why cut the price? It has a long list of waiting buyers outside the US that are happy to fork over the current price. Yet they don’t get the car. But IDK. Nothing GM has done since the Bolt launched makes sense to me. If they just wanted the carb credits it would have been easier and cheaper to just give away Sparks at a far too low price. The only guess I can venture is that they want to learn about EVs by having EV customers, but in that case outsourcing so much of the engineering to LG makes little sense. Certainly if they want to put a dent in Tesla sales the Bolt has to get cheaper and be pushed a lot harder. But I think it would have to be very cheap indeed to cause any worries over demand for Model 3..! Tesla has an even stronger emotional bond with its fans than Apple ever did, and that is already cultish. I really believe that quite a few people would buy the Model 3 even if GM gave away Bolt for free (not me, but there are many people… Read more »

Share prices always represent future value, and many times go down after an introduction of a new product, because of profit takers.

Why are you so mad Bro?

I really do thing the stock is quite overvalued, it’s just shorting Tesla is like having a Tiger by the tail. It doesn’t end well for the holder.
https://www.youtube.com/watch?v=jBeOddejiGw

Yeah, shorting a hot stock is playing with fire, even if it is severely overvalued. Even if you’re right in the long run, in the short term you can lose your shirt, and the position will be closed out long before you end up being right.

You have some nerve showing your (anonymous) face around here after your disastrous “blatant deception” comment on the Volvo vs Tesla side impact article yesterday.

You reckon you still have some credibility left here?

ROFLOL!

I think you’re right. Buy the rumor, sell the news.

Hey bro1999, why don’t you have the courage to go back to the crash test story and say:

“sorry, I was wrong, the tests were done at the same speed. I got this info from XXXXXXXXX and they were wrong. I should have checked before parroting some troll and making a fool of myself.”

TSLA is likely to go up and down and up and down. It has traditionally been a very volatile stock. Whether it goes up or down on any one day is really pointless.

But it currently is UP in after-hours trading. (you do realize that you don’t have to wait until Monday to trade TSLA, right?)

A common saying is “buy on rumor, sell on fact”. The model 3 is already priced into the stock price so this event is not going to change much, probably it will go back a little bit. What’s more interesting is how sales will develop over the next 6 to 12 months. If Tesla is unable to ramp up as claimed then the stock will take a significant hit

I don’t know. the one thing that seemed to be holding the stock down was the prospect that Tesla would flub the roll-out, or the M3 would not live up to expectations. Neither of those happened.

I think we could see the stock easily vault to new highs. Of course if they can do it, meet their production goals, is the most important thing, but it’s also pretty obvious.

There’s a lot of stuff that can cause the stock to take a hit. The profits on the Model 3 might not be as high as hoped. The ramp up might be slower than hoped.

Tesla is an unproven company that has been burning through money. Sentiment can turn on it pretty easily.

Yes, and while there are investors/analysts who understand EV’s, there are a ton of investors/analysts who don’t.

Here is how I imagine some of them responding to the Model 3 release:

EV savvy analyst: The Model 3 is actually happening! We didn’t expect this to actually happen half a year ago when TSLA was at $190/share. This is good news for TSLA shares in the long term. The 220’s will be out in just a couple of months. The 310’s they delivered are quick too. 5.1 seconds 0-60 is peppy, faster than the 5.6 second 220’s.

Regular analyst: Oh yea? 0-60 isn’t bad, but my BMW 340 is faster. So what engine is in the 310? I bet it is a 3.1 liter V-6, right? Do they use a turbo 4-cyl 2.2 liter in the 220, like an Audi A4? You really need a turbo, but I hate the lag in the A4. My 340 doesn’t have any lag.

EV analyst: Umm… How’s your coffee? Did you see that they have donuts in the break room? *facepalm*

500,000 Tesla Model S will have a large effect on global oil demand.

Such as up till now OPEC can cut back oil production by a few million or hundred thousand barrels of oil a week or day or quota.

Now we will have the ability to put in a few hundred thousand or a few million high ranged EV’s on the road to make our own rules with OPEC.

Let’s say each Model 3 displaces a 500 gal/year gascar (mix of 25 mpg BMWs and 40-50 mpg hybrids for 28 mpg average over 14k miles).

500k * 500 gal/year = 250 million gal/yr = 16,300 bpd

That’s 0.016% of global oil consumption. It’s a rounding error. Model 3 is important because, if it succeeds, it will move the entire industry toward EV mass production. It will also give legislators the leverage they need to ban/punish ICE.

+96 million (barrels of oil per day)

Tesla alone cannot end our dependence on fossil fuels, but it can inspire and lead the transportation industry to zero emission vehicles! (Well, most of it. Commercial airliners are going to be a difficult market for electric drive to penetrate, except for short-range “puddle jumpers”.)

I do agree that TM3 alone won’t kill the oil market, but just the mere fact that Tesla delivered on time will put a pause in the oil majors because every automaker will have announced a more aggressive ramp to their EV plans before the end of the quarter. However, you’re correct that cars are a rounding error, but any stagnation in demand growth will spook the oil market. Also, everyone forgets that electric buses, trucks, and even ships are waiting in the wings and they will have a much bigger effect on demand than cars.

I think saving oil is important because when you burn it, after conversion, it’s gone.
Oil is useful for many things, and burning less of it, as fuel is a good thing.
Not to mention there is also less pollution with ev’s.

Not Tesla bashing here. Just wondering if competition from the next gen Leaf will have any effect on those reservations. In areas with cold winters heated seats and steering wheels are necessary to reduce cabin heating demands on the drive battery. These are part of an expensive option pkg. with the M3 but are standard on the Leaf. Also, there has been no mention of whether heating is done with resistance or a heat pump. Still hoping Tesla sells lots and lots of cars.

@Paul K: Your question seems entirely reasonable to me, not Tesla bashing at all. Every new production EV is going to have some effect on Tesla Model 3 reservations. The question is, of course, how much. But look at the Model S. What cars are the MS stealing market from? Is it primarily other PEVs (Plug-in EVs)? Heck no! The overwhelming majority of Model S owners didn’t own a PEV as their previous car. The market for the Model S is coming from Audi and BMW and Infiniti and other “premium” brands, as well as more down-market brands like GM and Toyota and Ford. Many Model S buyers say the car is far more expensive than any other car they’ve ever owned, but the car is so much better than gasmobiles that it’s worth the higher price. And if the Motor Trend driving review of the Model 3 is any indication, the Model 3 will also be stealing most of its market from gasmobiles, not from other PEVs (Plug-in EVs). I’m going to quote the first line of that review, not to be a Tesla cheerleader (or at least, not only to do that), but to suggest that you stop… Read more »

I think the introduction of the m3 will lift the entire segment. A lot of press about the m3 will make more people interested in EVs and many people will for various reasons choose another EV in the end.

I think you’re hitting the nail on the head. People will investigate Tesla, perhaps realize that it’s a bit out of their price range still, but that GM is willing to provide a similar car today and cheaper.

I think it could have a significant effect. There are some for whom it’s Tesla or nothing. But most folks are more pragmatic and will cross shop. They will look at the 3, the Bolt, the Leaf and even the Volt or Prius Prime. It will all come down to value for money and most folks have an absolute price ceiling regardless.

Paul — You are definitely not bashing at all. The apparent lack of seat heaters in the front seats will indeed cut into range in cold climates as the cabin heater has to do all the work.

Hopefully Tesla will see the error in their ways on this issue, and make seat heaters for the front seats standard, and part of the option package for the rear seats.

With that said, NOBODY should buy the $5000 dollar upgrade just to get front heated seats. There are a ton of perfectly good aftermarket heated seat options out there now, that any aftermarket interior shop should be able to install for a tenth of that price. There are ceramic and wire options, and a skilled DIY’er should be able to install their own for under $200 dollars.

Tesla shouldn’t force their customers into such a crazy situation, but in cold climates that may be completely necessary to keep range up.

Not sure I would want a car made during “”manufacturing hell”. Good luck to them though.

And, as Elon himself said, the rest of us will need to thank those who are willing to buy the manufacturing hell vehicles so that we can eventually enjoy debugged cars. Early adopters get pride of ownership and bragging rights, the rest of us hopefully get reliability and choice 🙂

Tesla has a history of producing cars with increadibly high owner satisfaction, and everything else is covered under warranty. 🙂

Well Steve, unless you got a reservation in the first week, you won’t have the option to even worry about it if you even wanted to worry about it.

“We’re going to go through at least six months of manufacturing hell.”

Perhaps the reason Elon looked tired at the Reveal and didn’t seem interested in really promoting the car all that much, isn’t because of any “anti-selling” strategy, but merely that he’s not looking forward to another six months of worry and sleepless nights.

I still say he should hire someone else to be CEO of Tesla, concentrate on running SpaceX, and devote more of his time to his family and his personal life. But obviously a workaholic** like Elon isn’t going to listen to me!

**Actually, I think the term “workaholic” is a vast understatement when it comes to Elon. Like describing Mt. Everest as a “tall hill”.

I seriously just think he’s sick and tired of people asking when they will get their Model 3. It was his way of saying, “dude, back off on asking about your damn car, we’re damn busy in case you didn’t noticed, OK?”

Besides, with apparently with the surge in reservations, doing the hard sell wasn’t needed.

This is still just a vehicle for the relatively wealthy. This is only suitable as an expensive local commuter vehicle at this time, as there is insufficient infrastructure for any real road travel with such a vehicle. I expect most buyers will still have at least one additional vehicle that is an ICE for any extended travel.

I wouldn’t say local commuter, rather commuter period. 200 miles round trip pretty much makes up 95% of all commutes.

I don’t know that the Camry commuter uses that vehicle for vacation. The Camry is not going to give you 0-60 in 5.6 seconds either. And there are more and more like myself who care about their energy source and offset their usage via solar. Those of us who do have gotten the cost down to 25-50 cents equivalent per gallon. Now if you drive the miles and you keep it for 6+ years, then it is no longer as you say “an expensive commuter”.

Ken,

Have you seen this map? This is infrastructure

https://www.tesla.com/supercharger

Did we just jump back to 2012 again?

The most sucessful vehicle in history in many ways. Tesla has inspired many other companies. There is a clean vehicle for any budget. Just add up the life cycle costs and it’s less cost thaN any vehicle, except my bicycle.

This is wonderful news. I didn’t catch any mention of reservations at the event, and actually thought the number might have declined..! My only disappointment is that what I’ve feared all along does seem to come true. Only the most barbone version is $35k, and it’s a pretty big step up to add anything, even any colour other then black. I’m pretty sure I’m not willing to spend way over $40k on a car, so for me the question will probably be if I should get the base version Model 3 or a less exciting, but better equipped and cheaper car – such as the 2018 LEAF, or the Ioniq when it gets a battery worthy of the car, or the 200-mile i3 rumoured to be on the way, or some other car I can’t think of at the moment that arrives before I can possibly get the Tesla..! Even so, the car seems great and I really hope they manage to ramp up without too much drama. If things go smoothly it will really light a fire under the butts of a lot of board members in incumbent car companies! So regardless if I can have it or not,… Read more »

I just checked the website and it say 12-18 months for new reservations. I am in the eastern US in a non-CARB state. I expect that cars will be available to those in the US willing to pay for a spec car – rumored to be $49,000.

I would be surprised if the new Leaf comes in much cheaper than the base Model 3.