Loyalty. Tesla is expressing loyalty to existing customers so as to engender customer loyalty to Tesla. Once you have your Model 3, you will become the beneficiary of the same loyalty.
Its also pretty clear that employees and owners have selected to delay their orders more then not. If you assume 7000 total deliveries to date including the recent invites that just went out. That is every employee and every US owner that does not want to delay their order for a SR, AWD, P or some other version. That is a very small number given the 500,000+ reservations. I am sure there are some non-US owners as well but most will clearly delay their orders and more then half are probably US. I would imagine that non-Owner invites would be going out any day now and the price of the LR is appropriate for those who can take full advantage of the tax credits. Actually the only thing that makes sense from a Tax perspective is to delay the SR until last since the person who can only afford to $35,000 cannot fully leverage the full tax credit. What is also critical is not so much how many model 3s get produced and delivered this quarter, but how many get produced and delivered starting at 200,000 in the US until the end the following quarter. I think this is what Tesla is focused on. Being able to deliver the maximum number of cars from 200,000 to 350,000 before the end of the top couple of levels of tax credits, which fit the model 3 very well. If you think about the base model S, the $7500 is less then 10% savings. For the 3, the $3750 is more then 10% of the base model 3 and that credit will extend at a minimum through the end of Q1 2019. You could say that everyone buying a base model S is rich, but I would guess that many stretched to buy that vehicle as many will stretch to buy a $45,000 model 3. Dont forget that the Base Model 3 is competitive with a base Camry with no tax credits. People will find a way to justify buying the $35,000 version in very large numbers with little or no fed tax incentives. The $1,875 credit continues through most of 2019, so US non-owners are going to be getting a good deal when compared to ICEv alternatives and even Bolts that are 2500 more expensive without fast charging.
Lastly, there are still state incentives and states can add incentives and many might as response to the lack of the US being in the Paris Accords. At just $2500 for state incentives, the Model 3 would crush the Camry in overall value. The market for that type of car in the US is upwards of a million per year. 30% share, which would less then mirror Model S's 36-40% market share, would be upwards of 300,000 base model 3s. The market for the higher end cars is smaller but still probably well over 200,000 in the US alone. Doubling that is how you get to a million Model 3s per year in terms of market demand. The problem now is building that many. My belief is that if Tesla can get to 5k/w, that is the milestone that is required to open up 10k through duplication and speeding up parts of the line. Everything else is just duplication. Another 10k a week could be added to the East Coast if the demand warrants, though my guess is that the new plant would mostly make Ys on the East Coast and a new plant in China would make Ys and 3s. The hope is also that the Model Y is based mostly on the Model 3 and thus the majority of the suppliers are set, many of the production processes including packs would be the same and just a matter of duplicating lines. There will certainly be some production hell because the cars are different, but Tesla will have a lot more experience with high volume automated production and even FWDs if they choose to go that direction (though I hope they do not).
I wonder how much of the Semi goes into the pickup or if it will be on the completely new Platform that Elon talked about originally for the Y. Its not a bad idea given the margins that could be leveraged by cutting massive costs out with a hyper automated alien dreadnought. This will be the blow that puts GM and Ford on their heels. The model Y is targeted at the Japanese markets and the S3X is targeted at the Germans. What was it that Churchill said:
"This is not the end, this is not the beginning, but this is the beginning of the end."
The S3X is the beginning. The Y is not end but its the beginning of the end. But the Pickup IS THE END. This lineup will end ICEv by draining the margin out of the competition from the top down. This is the life blood of their ability to react. Without large amounts of cash, they are in trouble and the time to start working on the problem was 5 years ago. They are desperately behind the curve.
