Cancelling my reservation

[JRP3]

I'm a bit surprised to see the various arguments from Tesla forum members about how I should not feel that they should build and deliver the $35K version now. Wow.

We are equally surprised that your argument is that Tesla should lose even more money and further jeopardize their business. Quite simply they cannot deliver the base model vehicle at this point in time, they can't even deliver the higher end versions at the desired rate.

 

[N5329K]

We are equally surprised that your argument is that Tesla should lose even more money and further jeopardize their business. Quite simply they cannot deliver the base model vehicle at this point in time, they can't even deliver the higher end versions at the desired rate.

They would if they could. But they can't (as soon as we might like them to). And, to bring this long, long, long thread around to the OP's title, that's why I canceled.
Robin

 

[FlyingKiwi]

My assumption is that the negative gross margin is because of NRE costs associated with starting up a new production line.

It's always negative in the beginning. That's normal. Product lines don't magically pay for themselves. Costs of getting up and running are amortized over the life of the product -- meaning as production volume increases, costs go down for each individual vehicle. I didn't read that as meaning that the COGs > than the base car price, only that engineering development costs plus expenses associated with line startup are exceeding profit to-date. Which makes sense. It also makes business sense to get to the positive side of the line by making heavily optioned cars. It means they reach break-even that much sooner.

It all depends what exactly was meant by gross margin The quote was "We are expecting a negative Model 3 gross margin in Q1".

Negative net margin once you throw in all those costs you mention is one thing, but gross margin indicates there are lots of costs they haven't included which only makes things worse.

 

[FlyingKiwi]

"This far into production ramp" is basically still at the beginning. Elon set aspirational goals but at the same time said those goals would likely not be met on time. No one seems to remember that part yet they "remember" a "promise" which was never made.

"Basically still at the beginning" = 6 months after initial deliveries. Would not be tolerated at any other car manufacturer, plant/production line managers would have been given the boot and somebody competent found to get the line running.

He may not have said the words "I promise" but $35k was a price mentioned multiple times, including in press kits etc. See @BlackM3s post

 

[ℬête Noire]

"Basically still at the beginning" = 6 months after initial deliveries. Would not be tolerated at any other car manufacturer, plant/production line managers would have been given the boot and somebody competent found to get the line running.

More like with any other car manufacturer you don't hear about this stuff because they pad like crazy schedules that come out publicly (and usually internally), and nobody in the public really cares this much what's going on.

 

[N5329K]

...and nobody in the public really cares this much what's going on.
This ^
Robin

 

[206er]

I'm a bit surprised to see the various arguments from Tesla forum members about how I should not feel that they should build and deliver the $35K version now. Wow.

There are a lot of Tesla superfans here (I used to be one), and many hold company stock. It is disappointing to see how to roll out has gone for us who were hoping to have a $35k Tesla by now, but I understand the fanaticism. I was willing to overlook shortcomings and defend Tesla and Elon at every turn until my excitement started to wane after the second reveal. "That's it?" I recall thinking... then the whole newer S & X owners getting to leapfrog early reservation holders thing really got on my nerves... then actually getting to experience a $50k version of the car in-person for a few hours and being underwhelmed by it was another shot to my fanaticism... and then finally, the most recent delay that pushed my SR estimate to "early 2019", thus rendering delivery incompatible with my next child's arrival, was the last straw.

 

[MXWing]

There are a lot of Tesla superfans here (I used to be one), and many hold company stock. It is disappointing to see how to roll out has gone for us who were hoping to have a $35k Tesla by now, but I understand the fanaticism. I was willing to overlook shortcomings and defend Tesla and Elon at every turn until my excitement started to wane after the second reveal. "That's it?" I recall thinking... then the whole newer S & X owners getting to leapfrog early reservation holders thing really got on my nerves... then actually getting to experience a $50k version of the car in-person for a few hours and being underwhelmed by it was another shot to my fanaticism... and then finally, the most recent delay that pushed my SR estimate to "early 2019", thus rendering delivery incompatible with my next child's arrival, was the last straw.

There would BE NO MODEL 3 period if it weren't for the S and X owners. And no S and X if it wasn't for the Roadster adopters. Being able to get Tesla's newest for $50,000 a few months earlier is a "tiny bonus" given they all paid six figures+ for technologically inferior cars to be an early adopter/supporter.

Who cares about those people?

Model 3 is actually Model "ME" (Millennial Edition?). Previous owners don't matter, Tesla shouldn't make fiscally responsible decisions, etc, etc

The LR Model 3 increased costs worth it price-proportion wise to the SR Model 3 with no upgrades. If you are underwhelmed by the current Model 3 with the tax credit you will be as equally underwhelmed by the 35k Model 3 without the tax credit.

 

[run-the-joules]

There would BE NO MODEL 3 period if it weren't for the S and X owners. And no S and X if it wasn't for the Roadster adopters. Being able to get Tesla's newest for $50,000 a few months earlier is a "tiny bonus" given they all paid six figures+ for technologically inferior cars to be an early adopter/supporter.

To be entirely fair, they were giving owner priority to people who bought used cars from third parties a year and a half after the reservations opened and so forth. I doubt anyone would have cared if people who bought brand new S or X before the reveal or throughout 2016 were getting priority, but in the end it became sort of a crapshow.

 

[N5329K]

There would BE NO MODEL 3 period if it weren't for the S and X owners. And no S and X if it wasn't for the Roadster adopters. Being able to get Tesla's newest for $50,000 a few months earlier is a "tiny bonus" given they all paid six figures+ for technologically inferior cars to be an early adopter/supporter.

Who cares about those people?

Model 3 is actually Model "ME" (Millennial Edition?). Previous owners don't matter, Tesla shouldn't make fiscally responsible decisions, etc, etc

The LR Model 3 increased costs worth it price-proportion wise to the SR Model 3 with no upgrades. If you are underwhelmed by the current Model 3 with the tax credit you will be as equally underwhelmed by the 35k Model 3 without the tax credit.

I can attest to that.
Robin

 

[MXWing]

I can attest to that.
Robin

What was going to be your Model 3 alternative?

 

[Lem89]

There's been a lot of cold water hitting people's faces about the base Model 3 (myself included). I think many non-owners/Tesla followers who reserved early are finally seeing the reality of what's involved in actually bringing about a new production car at Tesla. But for me it makes me appreciate the car even more and I'll gladly wait for my standard battery, AWD.

 

[N5329K]

What was going to be your Model 3 alternative?

I didn't need an alternative, and won't for some time. Which is a good thing because for now there is no alternative. The combination of good-looking, electric, tax credit, fairly soon and Tesla at a not-ridiculous price was persuasive. Take away one or two or three of those (tax credits, price and time), and it was no longer persuasive enough.
It's like waiting for a very low (below IFR minima) overcast to lift. I could launch and trust that everything will go according to plan and I won't have to turn around and land (which would be an emergency-only evolution), or I can wait.
I can wait.
Robin

 

[run-the-joules]

I didn't need an alternative, and won't for some time. Which is a good thing because for now there is no alternative. The combination of good-looking, electric, tax credit, fairly soon and Tesla at a not-ridiculous price was persuasive. Take away one or two or three of those (tax credits, price and time), and it was no longer persuasive enough.
It's like waiting for a very low (below IFR minima) overcast to lift. I could launch and trust that everything will go according to plan and I won't have to turn around and land (which would be an emergency-only evolution), or I can wait.
I can wait.
Robin

'tis better to be on the ground wishing you were in the air than the inverse, as some of us well know

 

[dsvick]

The part where we got tricked was when the car was delivered for $49K (40% price increase)

I fail to see how they tricked you when, as you mentioned in your previous post, it has always been Tesla's practice to deliver the more highly optioned cars first, in fact they said that they were going to do this with the model 3 as well.

I'm a bit surprised to see the various arguments from Tesla forum members about how I should not feel that they should build and deliver the $35K version now.

And if they were delivering the $35K version now there would be people that wanted the other version. Someone has to be first, you're just upset that it isn't you.

 

[Lem89]

then actually getting to experience a $50k version of the car in-person for a few hours and being underwhelmed by it was another shot to my fanaticism... and then finally, the most recent delay that pushed my SR estimate to "early 2019", thus rendering delivery incompatible with my next child's arrival, was the last straw.

Fanatacism I understand. We focus on this car so much that I think everyone who hasn't driven one will get a little cold water thrown on them when they do, the temperature of which will vary by degree of expectations.

 

[206er]

To be entirely fair, they were giving owner priority to people who bought used cars from third parties a year and a half after the reservations opened and so forth. I doubt anyone would have cared if people who bought brand new S or X before the reveal or throughout 2016 were getting priority, but in the end it became sort of a crapshow.

Yeah, honestly - the leapfrogging wouldn't have bothered me if they had restricted it to new owners of new Teslas. Seeing new used buyers leaping over us day 1 reservation non-owners, at least according to accounts on this and other online forums, was quite upsetting.

 

[diamond.g]

March 2016: On stage Elon says:
"In terms of price it will be 35 thousand dollars".
"You will not be able to buy a better car for 35 thousand dollars even if you get no options. It's a really good car even with no options."
On the same day, they collected hundreds of millions of dollars in (refundable) reservations from a new group of people hoping for a $35K car.
Actually I still believe Elon's statements, and I think Tesla is an overall good company that will deliver on their promise. Production delays of a year are a credibility issue, but not the biggest problem. The part where we got tricked was when the car was delivered for $49K (40% price increase) and they will keep improving and delivering that version for at least a year before they sell the $35K version. I'm a bit surprised to see the various arguments from Tesla forum members about how I should not feel that they should build and deliver the $35K version now. Wow. Anyway I'm looking forward to enjoying the car.

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Kind of sounds like how the S was supposed to be a $50000 car. We all saw how that turned out.

 

[Chris350]

Ok....

I believe that is is sort of a timeline of events...
1.) The car was announced at 35k and the tax credit was also part of the selling points during the reveal.
2.) Employees and current owners would get cars as a priority first.
3.) Reservations go on sale - Sight unseen to most reservation purchasers (allot of new non tesla owners... allot more than owners)

Huge interest ...... 500k reservations later we find out.... after we put the money down....

1.) The LR PUP max version will be sold first (40% high cost)
2.) Delivery estimates get announced to res holders...
3.) Cars start going to employees....
4.) Delivery estimates get bumped (1st time)
4.) Cars start going to current owners..... But we then learn that anyone buying a S or X at anytime (in the past 2 years) get's priority over all those people who laid down the cash long before some of the current owners owned a Tesla (new or used).
5.) AWD now get priority over the SR.
6.) Delivery estimates get bumped a 2nd time.
7.) Majority feel they will not see the tax credit.

Maybe I missed something there....

I guess if I were to be upset about anything would be to not "over promise and under deliver". I get the business aspect of producing in the way that are making cars.... But don't give the public the impression that it's the other way around. Non-Tesla possible customers will be lost forever due to the sense that they aren't being treated fairly based on how it was represented.... Sure, I'm in for the LR PUP MAX version... I am a non-owner.... I get the employee first and past owners second.... But I do not understand the allowance of letting any new purchasers (past the open res date) "jump to the front of the line" perspective.... I also don't understand that some owners of a S or X have had a chance to not only get a Model 3.... But have also been allowed to configure and take possession of a 2nd Model 3. That's major salt in the wound for all those out there that want to be 1st time Tesla owners.

New customers is what will make this company survive.... and at the end of the day, Telsa has not done much in acknowledging that... They gave the impression of a 35k car and tax credits to raise allot of money and came to the conclusion that they had to change the plan (just like the interior change)... then they allow people to jump inline after these new customers put their money down months and years before.

I am in for the long haul (as much as I went from a Tesla fan to being disappointed)... But to see some of these posts backing Tesla in their current game plan is baffling.... Not that there is much we can do about it....

I want the car.... I'm about ready to start hunting down Tesla owners locally and then trying to politely ask to see if they would be so kind as to order me one! LOL!

 

[ℬête Noire]

Kind of sounds like how the S was supposed to be a $50000 car. We all saw how that turned out.

Tesla sold some?

EDIT: Oh right, that was the infamous and ill-advised 40kWh model that even though it was sold at that price it was only to maybe a few hundred people that bought because it was generally a Bad Idea(tm) due to the range was limited.

That doesn't really fit the 215mi range Model 3 SR profile, right?