Blog 63,000 Canceled Model 3s is Like a Shorter Line at the Hamburger Stand

Tesla CEO Elon Musk compared the electric car company to a busy hamburger restaurant on Wednesday’s quarterly earnings call.

When explaining his thinking around the cancelation of 63,000 Model 3 preorders, Musk used the opportunity to underscore the difficulties ahead in scaling production.

“Those cancellations occurred over the course of more than a year,” Musk said. “I think [these numbers] are inconsequential. With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there’s no point. It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour and a half wait for hamburgers, do you really want to encourage more people to order more hamburgers?”

The company had a total of 518,000 preorders but 455,000 net orders at last count. The company hopes to a hit a run rate of 5,000 vehicles per week by the end of 2017 and 10,000 vehicles per week in 2018. So, if you order a Model 3 today it likely won’t be delivered until the end of 2018.

You can access a webcast of the earnings call here.

 

[manitou820]

I suspect a similar amount of cancelations (10% -15%) will happen when it comes time to order. It's relatively easy to put down a $1000 deposit. But it's another thing to commit to buying a $35k+ car.

 

[Alketi]

I suspect a similar amount of cancelations (10% -15%) will happen when it comes time to order. It's relatively easy to put down a $1000 deposit. But it's another thing to commit to buying a $35k+ car.

No doubt. But how many new reservations will be created when a co-worker gives test drives, or when Tesla actually stops anti-selling the car?