As excited as I am about the success/enthusiasm surrounding the Model 3 so far, I have had concerns for a while about the huge demand and backlog. Someone at Tesla has surely realized that instead of launching a car jam packed with as many features as possible, they can set the bar low, still sell all the cars they can make, and slowly upgrade and ramp up the bells and whistles over time. The only problem with this approach is that it leaves them vulnerable to competition from others. When Apple launched the iPhone, everyone openly discussed how this was going to cannibalize iPod sales. Fast forward 10 years, and the iPod is basically non-existent, but Apple's philosophy was that they'd rather cannibalize their own sales than have a competitor do it. I'm not saying the Model 3 is going to lead to the death of the Model S (as others have pointed out, it's a different car, for a different demographic). I just hope that Musk's attitude of packing it full of features continues to dominate the discussion at Tesla (accepting that some features just aren't 'ready' yet, and allowing an "on time" launch and gradual improvement). I hope that they aren't using the huge demand as an excuse to hold back on features for the car, then roll out new features as supply improves and demand starts to wane. Only time will tell, but I'm hoping once they start actually selling the Model 3, they'll do what every other car company does, and keep each car in its own segment. BMW 3 and 7 series don't compete with each other, and presumably it's possible to buy a 3 series that outperforms the 7 series depending on each car's configuration.
IBM was cautious about not letting PC to cannibalise higher models...
Kodak first developed digital camera, but was cautious about not letting it to cannibalise film sales...
Lesson from the story; if you don't cannibalise your procucts, someone else will.