04.30.16 - Elon Musk

Is the Model 3 Going to Prove too Much for Tesla?

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04.30.16 - Elon Musk

An automaker that has been a volume seller for many years knows how to mass produce a vehicle, but one that hasn’t ever experienced the kind of feedback and preorders the Tesla Model 3 has already experienced just might be in trouble when it comes time to deliver on the promises made. So far Tesla expected the Model 3 to be ready for customer deliveries in 2018, but that may be too aggressive to even consider. It will be fun and interesting to see what Tesla does to make the Model 3 a huge success, but here are some challenges they face along with realities we need to think about.

Delays – The Model X was delayed for two years before it finally made it to be delivered to some or any of the customers who had put their deposits down on this SUV. While the Model 3 won’t be as complicated as the Model X and isn’t made to be as costly, which means a little less time perfecting the car, the fact the Model X was delayed doesn’t bode well for the Model 3 which will now be the third vehicle to be put on the same assembly line at Tesla.

Production – The goal is to produce 500,000 Model 3s per year once they fill the initial orders. The problem is the initial orders continue to grow. Tesla has never produced the number of cars that will be needed to keep those who want one satisfied. These production delays could mean customers turn to other manufacturers for their EV model and even though they won’t be Tesla products, there is no doubt a production delay or challenge could be met with impatience as many customers expect this car to be their next daily driver.

Timeframe – The fact that the Model 3 won’t be offered until 2018 means we will probably have other models by that time that are just as good or better. While Tesla did a masterful job of undercutting the Chevrolet Bolt with price and range there will be many customers who will pay the extra $2,500 for the Bolt when they can have one in 2017 or 2018 instead of waiting until late in 2018 for Tesla to be able to deliver on their promise. Tesla also set up the preorder so that current Tesla owners went to the front of the line, which makes sense for repeat customers, but for owners who are new and near the bottom of the reserve list, the wait could turn them off.

Should you put your money down on a Tesla Model 3? There really is little risk in getting your place in line now. The $1,000 deposit is affordable for nearly every budget and if you choose another model before Tesla delivers your car you can have a full refund of this deposit. This makes taking your place in line extremely attractive, just be aware of the fact you might be in line a year or more beyond what you expect right now.

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