How many model 3 reservations will cancel out of 400,000?

[ricardocabesa]

Doesn't solve the whole "stuff inside the luggage doesn't fit" problem.

I never said it did. Just use my suggestion and move on. Or ping Elon with your concerns.

 

[flamingoezz]

Lucky!!

Also to consider, car must be delivered within that 2nd quarter of phase out to be considered for tax credit. If they produce 20K in Q4 (still under 200K US), 100K in Q1 & Q2 and all those cars are for US buyers which is the super best case scenario, that is still only 220K cars produced and I'm sure 5-25K of those will fail to be delivered by end of Q2 despite being manufactured in time. Under 200K may get the tax credit even in the best of circumstances.

With the experienced hires, ingenuity, and time spent preparing for Model 3, I'd hope the S curve happen in 2017, hence Elon's very broad 100k to 200k.
That said, let's pretend there's an S curve ... Since Model S and X combined will not put Tesla over 200,000 then if model 3 outputs are below 20k, they could simply delay the 200,000th car until January 1. This would give until the end of June for a full rebate.

My reservation is around the 115k (global) mark probably around 70-80k US maybe so I'm not worried.

 

[JeffK]

Under 200K may get the tax credit even in the best of circumstances.

I was overestimating anyway... really you have to estimate 60% of the original 373,000 number (223,800 people), everyone else would be a late reservation holder and will likely get half credit. ( ...or a quarter or none if they are really a slacker )

 

[jgillispie]

No one has even seen the finished vehicle yet...complaints about the prototype trunk might not even apply.

I see the largest amount of cancellations coming from other 200 mile range EVs hitting the market. When the 3 was announced there was nothing else in the ballpark, now there's already the Bolt and a number of others coming out in the next year.

Another question is, will Tesla end the S60 option as the 3 is released to keep a gap between models? Was it not introduced to upsell M3 buyers not wanting to wait?

 

[03DSG]

Another question is, will Tesla end the S60 option as the 3 is released to keep a gap between models? Was it not introduced to upsell M3 buyers not wanting to wait?

If you look at Ford or any other 'Build and Price' it's easy to get an Escape priced above an Edge and so on. Base prices will never overlap but comparing a loaded Escape with a basic Edge will be the same as a loaded M3 compared to a basic MS60. The loaded M3 will cost more. They very well might keep the MS60.

 

[JeffK]

If you look at Ford or any other 'Build and Price' it's easy to get an Escape priced above an Edge and so on. Base prices will never overlap but comparing a loaded Escape with a basic Edge will be the same as a loaded M3 compared to a basic MS60. The loaded M3 will cost more. They very well might keep the MS60.

...plus there are people who have larger families and simply need the larger car. I could see them switching to 21-70 cells and dropping the 75kWh to the current S60 price. (or something better)

 

[jgillispie]

...plus there are people who have larger families and simply need the larger car. I could see them switching to 21-70 cells and dropping the 75kWh to the current S60 price. (or something better)

That's exactly what I am expecting. Certainly there's overlap with options but there has to be a draw to the higher base priced car and I think selling the 75 at closer to 60 price is the way to do that.

 

[MXWing]

[


It is pretty certain Tesla will hit the 200,000 U.S. Deliveries either the last quarter of 2017 or the first quarter of 2018. This information has been published. Based on the latest figures they could do this with just S and X sales and since hopefully there will be some Model 3 deliveries in 2017 I am betting on the last quarter of 2017. This would be a good thing as many of the Model 3 purchasers in 2017/2018 would at get a part of the rebate, if not the whole $7,500. Don't forget they plan on not decreasing the number of S/X made in 2017 or 2018. Since the S and X are made on a different production line this shouldn't effect Model 3 orders.

With regard to the pricing on the Model 3. Slowly over the last year the Model S and more importantly the Model X have gone up it price. Where the top of a fully loaded Model X was around $152k in 2016 it is now $170k with the last increases. This is a 10% increase in just 6 months . That doesn't even include the 6% they charge in my state which bring the total cost to $180k. There is no question there will be a correlation between the prise of a S/X and a 3.

The Model 3 is suppose to start pulling Tesla out of the red. I read there is no more than a 8-10% margin on a base Model 3. Where car manufactures make their money is on options. With the Model S and X they are offering less individual options and packaging them into groups. They are also starting to drop some of the items within groups and not offer them anymore. They latest thing to go is they no longer offer cooled seats. (No announcement, it just disappeared from the description of the luxury option on 1/1/17.) I would expect they would do this across all products. They also dropped two of the colors in 2016 but didn't add any new ones.

To make money on the Model 3 they will have to limit options into groups and limit colors and interiors. This will be the only way for them to hit their production targets of 500k in 2018. Probably no more than 3 Variations (battery sizes), 5-7 colors, the same colors which are on the Model X/S plus maybe one or two colors specific to the Model 3. There will be no more than three interior choices, a basic plus a couple of upgraded interiors like the vegan white. Even if they only charge 1/2 to 1/3 the cost of the options of what they charge on the the S/X the mid-price 3 would still be $60k+ with a fully loaded going for over $90k+.

Where this and the reduction of the rebate will eliminate some reservation holders there are a lot of Gen X's with considerable disposable income who can afford a $60k-90k car. There are also those who will purchase a bare Model 3 for $35-$45k. This is still considered a luxury car so the price is not out of line with similar ICE cars.

I have seen where people think they will get a fully loaded Model 3 PxxDL for $60k-$65k. Tesla would be loosing money at that price. Tesla has to make money on the Model 3 or this could be the end of the game for Tesla.

I love your thinking and logic. Gonna follow your stock picks.

I am thinking $35k Model 3 doesn't even come with brakes. (Learn one pedal driving). Tesla is banking on $10k worth of software upgrades from every 3 Purchaser to show revenue but not profit

I am thinking $80k for near top of the line.

 

[Testwa]

While from US are probably most pre-orders, the tax regulations for EVs vary quite a lot around the world. So a changing tax regulation in US will only affect the percentage that was ordered in the US. Upcoming EV subsidies in other countries might confirm pre-orders.
Also until now nobody really knows what he will get at the end but pre-ordered anyhow. So I assume most people with preorders are excited about the product and will get it no matter what. For sure some might not see their expectation being fulfilled at the end or at the time of possible delivery some attractive alternatives might show up ... sorry, actually I currently can't think of one

 

[ummgood]

I am curious if the expiration of tax credits will drive more orders up front but then how will they deal with it sliding off after they expire? For example say they get 2018 fully booked with 500k cars. What if some of those are people who really didn't need a car right away and moved up their purchase because they hope to get part of the tax credit. Then comes 2019 and they have a major demand drop for cars and Tesla goes through trying times. There is a distinct possibility that if the cars cost too much with options it might be more difficult to hit their projected sales volumes without the tax credits.

For me personally the tax credit will have a major impact on what options I put in my car. If I am getting only 3750 instead of 7500 I might not do the interior upgrade package or something like that. (Especially if it doesn't have ventilated seats). I could see your average buyer who is on the fence about electric deciding to go with a loaded Accord or Camry instead of the model 3 because at a 35k price point your average consumer is going to expect either leather or leatherette seats and some other basic items that might be options on the Tesla (this is coming from a Texan and I was told that almost all cars sold in Austin have leather checked as an option).

 

[ricardocabesa]

I am curious if the expiration of tax credits will drive more orders up front but then how will they deal with it sliding off after they expire? For example say they get 2018 fully booked with 500k cars. What if some of those are people who really didn't need a car right away and moved up their purchase because they hope to get part of the tax credit. Then comes 2019 and they have a major demand drop for cars and Tesla goes through trying times. There is a distinct possibility that if the cars cost too much with options it might be more difficult to hit their projected sales volumes without the tax credits.

For me personally the tax credit will have a major impact on what options I put in my car. If I am getting only 3750 instead of 7500 I might not do the interior upgrade package or something like that. (Especially if it doesn't have ventilated seats). I could see your average buyer who is on the fence about electric deciding to go with a loaded Accord or Camry instead of the model 3 because at a 35k price point your average consumer is going to expect either leather or leatherette seats and some other basic items that might be options on the Tesla (this is coming from a Texan and I was told that almost all cars sold in Austin have leather checked as an option).

Though I'll only qualify for $1875 due to my late order,it had no effect on ordering or options. The credit may be over a year for some folks-that is another factor.

 

[flamingoezz]

The way this tax credit shook out for Tesla enthusiasts is a little bit wonky.

I think the M3 launch would be more successful if they didn't give priority to existing owners. The people who have bought Teslas to date and reserved another likely have little concern about the credit - while middle-class car, technology or environmental enthusiasts that have been waiting the better part of a decade for an exciting electric car they can afford are definitely going to be affected by the tax credit level they receive. Cancellations and barebones cars are lost profit.

I am curious if the expiration of tax credits will drive more orders up front but then how will they deal with it sliding off after they expire? For example say they get 2018 fully booked with 500k cars. What if some of those are people who really didn't need a car right away and moved up their purchase because they hope to get part of the tax credit. Then comes 2019 and they have a major demand drop for cars and Tesla goes through trying times. There is a distinct possibility that if the cars cost too much with options it might be more difficult to hit their projected sales volumes without the tax credits.

For me personally the tax credit will have a major impact on what options I put in my car. If I am getting only 3750 instead of 7500 I might not do the interior upgrade package or something like that. (Especially if it doesn't have ventilated seats). I could see your average buyer who is on the fence about electric deciding to go with a loaded Accord or Camry instead of the model 3 because at a 35k price point your average consumer is going to expect either leather or leatherette seats and some other basic items that might be options on the Tesla (this is coming from a Texan and I was told that almost all cars sold in Austin have leather checked as an option).

 

[Twiglett]

The way this tax credit shook out for Tesla enthusiasts is a little bit wonky.

I think the M3 launch would be more successful if they didn't give priority to existing owners. The people who have bought Teslas to date and reserved another likely have little concern about the credit - while middle-class car, technology or environmental enthusiasts that have been waiting the better part of a decade for an exciting electric car they can afford are definitely going to be affected by the tax credit level they receive. Cancellations and barebones cars are lost profit.

Tesla have stated that there were about 7% owners in the reservation pool, so its not a huge amount anyway

 

[ricardocabesa]

Tesla have stated that there were about 7% owners in the reservation pool, so its not a huge amount anyway

7% of 500k is a significant number IMO.

 

[Troy916]

7% of 500k is a significant number IMO.

I would not consider 35k a significant number. It is well within the 2017 production goal as far as I recall.

 

[ricardocabesa]

I would not consider 35k a significant number. It is well within the 2017 production goal as far as I recall.

Yes,it's obvious 35k is well within the hoped-for 2017 production numbers. But that is not the question.

 

[JeffK]

7% of 500k is a significant number IMO.

The official number ws 373000 so 7% is under a month of production (when producing at full speed). The 7% number is global so it'll be a little more than half that for the US.

Although it doesn't matter because it's split up per region anyway. Non-owners on the West coast will receive cars before owners on the East coast. I doubt the delay in manufacturing owners cars in any given region would be over a single week (except maybe in California).

 

[Blu Angel]

Imho, I'm going with the 80:20 ratio.
So of 400,000 reservations, I believe up to 80,000 will cancel.
Time will tell

 

[dsvick]

Imho, I'm going with the 80:20 ratio.
So of 400,000 reservations, I believe up to 80,000 will cancel.
Time will tell

That maybe true for the earlier reservations that were more speculative. I hazard that any that were placed after the first few months are going to be a lot more certain, excepting for any sort of unexpected financial situation changes.

But you're right time will tell. Either way they'll get plenty more to make up for any cancellations.

 

[flamingoezz]

yes, under a month of full production numbers...early on, production will be less than half of that. so we're saying that employees will essentially get the first month of production, owners the next 2-4 months -- and the people who weren't rich enough to scrounge up enough for an S or X will have a handful of full tax credits remaining to fight over.

I really wish the gov't capped these credits at 1 per person, or Elon thought out how it'll affect people who have been waiting the better part of a decade for an affordable, exciting electric car. the rich get $15K back, the lowly middle class will likely see $3750.

The official number ws 373000 so 7% is under a month of production (when producing at full speed). The 7% number is global so it'll be a little more than half that for the US.

Although it doesn't matter because it's split up per region anyway. Non-owners on the West coast will receive cars before owners on the East coast. I doubt the delay in manufacturing owners cars in any given region would be over a single week (except maybe in California).