How will Tesla get from $66k to $35k?

[EVNow]

If it takes TWO years to deliver all 125,000 of those vehicles, they will be WAY behind on their 500,000 vehicles in 2018 goal. Embarrassingly behind.

Exactly - they can't have a rollout of 3 that resembles X.

For every "maxed out" 3 they sell, they'd sell 3 base Model 3s to get an average $42k price. Infact, since most "base" 3s themselves will probably have one or two options added making the price closer to $37k - I thinks most sales will be between $37k to $45k.

 

[heysteveh]

So you're confirming my comments?

Yes, I am!

 

[xav-]

Should someone who made a reservation after the 1st reveal in April 2016, but only expects to spend $35,000-40,000 on the car receive their delivery body someone who didn't make their reservation until after the 2nd reveal (let's say November 2016) even if the November order is maxed out?

I fully understand someone who made their reservation on April 15th and wants to buy a $60,000 Model 3 receiving their delivery before a $35,000 reservation holder who reserved on April 1st. Reservations have pretty much been flat since late April. So I feel everyone in that first bloc should receive their cars before ANYBODY in a later bloc.

There are 375,000 reservations. How many are from the US, less than 2/3? Let's just use 250,000. How many of those will be orders of $50,000+, at least half? Let's just say 125,000. If it takes TWO years to deliver all 125,000 of those vehicles, they will be WAY behind on their 500,000 vehicles in 2018 goal. Embarrassingly behind. And Tesla really cannot afford to sell something like only 50,000 Model 3s by the end of 2018 (50,000 Model 3s in 2018 and 75,000 in 2019 = the 125,000 with price tags >$50,000). Even if they're selling 200,000 Model S/Xs per year by the end of 2018, that's only half of their 500,000 goal. If you think the Tesla bears/haters are out in force now...

Not only will it be bad for Tesla stock, their reputation in the marketplace, etc, but they will lose thousands of reservations from folks who cancel because they're tired of waiting and thousands more from folks who are no longer eligible for a single dollar of federal tax credits. On top of that, by 2019-2020 there is supposed to be a lot more competition in the marketplace that may start to siphon off some of Tesla's sales if they're slow to deliver.

It's imperative that Tesla ramp up production on the Model 3 quickly and successfully in 2018.

Jmo.

i don't know about competition. I would not expect much as far as competition goes, especially at the $35k range. Half of the orders at $50k or more sounds high. I hope that's not the case.

 

[xav-]

Lurking for quite some time since making my reservation in March, but this is as good a place to weigh in as any...

I'm one of those who don't think there's gonna be that many going out at $35,000:

Autopilot (look at the current Model S numbers) - $2500

Dual motor, 4WD (Elon says under $5000) - $4500

Supercharger access (who knows, but it ain't gonna be free) - $2000

Wheels, performance packages, seats, cold weather packages, stereos, who knows what?

And that's just for starters. I'll pay whatever I need to when it comes up, but this is looking to me like a $40,000 - $45,000 car

They will definitely have a nicer battery pack (likely with forced AWD and free supercharging).. Which is going to be expensive.. And that will play a big factor for deliveries. I think it will push the price to $60k+ with some other good options.

 

[182RG]

I fully understand someone who made their reservation on April 15th and wants to buy a $60,000 Model 3 receiving their delivery before a $35,000 reservation holder who reserved on April 1st. Reservations have pretty much been flat since late April. So I feel everyone in that first bloc should receive their cars before ANYBODY in a later bloc.

There are numerous threads on late coming, highly optioned customers being pulled ahead of longer term, lower optioned customers with both the S and X. Priority and sequence threads will dominate TMC 10 to 1 vs. any other topic, circa 2018.

It could get ugly, fast, given the number of reservations, short timeline, and wild estimation of deliveries. TMC will be an exciting place!

 

[Booga]

There are numerous threads on late coming, highly optioned customers being pulled ahead of longer term, lower optioned customers with both the S and X. Priority and sequence threads will dominate TMC 10 to 1 vs. any other topic, circa 2018.

It could get ugly, fast, given the number of reservations, short timeline, and wild estimation of deliveries. TMC will be an exciting place!

One challenge will be the tax credit expiration. For some orders, buying more will result in a cheaper car because it could make you eligible for the full tax credit. My hope is they give us an expected delivery time at configuration so I can consider the odds of getting a tax credit, and how much it might be.

 

[SpiceWare]

Should someone who made a reservation after the 1st reveal in April 2016, but only expects to spend $35,000-40,000 on the car receive their delivery body someone who didn't make their reservation until after the 2nd reveal (let's say November 2016) even if the November order is maxed out?

...

Say what? My thinking that base M3's would start shipping summer of 2018 falls in line with what you want, it's maybe 6-9 months after they'd start shipping orders to non-Telsa/Space X employees. In that time, with a target of 500K produced per year, they'd not even be finished building the initial wave of reservations.

 

[alseTrick]

There are numerous threads on late coming, highly optioned customers being pulled ahead of longer term, lower optioned customers with both the S and X. Priority and sequence threads will dominate TMC 10 to 1 vs. any other topic, circa 2018.

It could get ugly, fast, given the number of reservations, short timeline, and wild estimation of deliveries. TMC will be an exciting place!

None of those past scenarios involve hundreds of thousands of reservations.

 

[pmadflyer]

Step 1: make 300 epa miles + $10-15k
Step 2: ...
Step 3: profit.

 

[JeffK]

For some orders, buying more will result in a cheaper car because it could make you eligible for the full tax credit.

I'm not sure I understand what you're saying here. At least in the US as far as the federal tax credit is concerned you'll get the same credit for the fully spec'd Model 3 as you would for the base Model 3. Unless you're saying due to the time delay they'll lose eligibility.

I fully believe if they can truly get out over 100k+ cars in 2017 that it may be possible to fulfill nearly all the US pre-orders with the full credit. The last deliveries will at least get a 50% credit. All assuming no major delays and the 200,000th US Tesla is delivered at the very beginning of a quarter. This leaves nearly six months of full tax credit for all deliveries, six months of 50% tax credit, and six months of 25% tax credit.

If US orders made up half of all the current preorders then they'd need well under 200,000 cars in a six month timespan to maximize the full credit option. Less if the model 3 starts rolling out before the 200k mark.

 

[Booga]

I'm not sure I understand what you're saying here. At least in the US as far as the federal tax credit is concerned you'll get the same credit for the fully spec'd Model 3 as you would for the base Model 3. Unless you're saying due to the time delay they'll lose eligibility.

I fully believe if they can truly get out over 100k+ cars in 2017 that it may be possible to fulfill nearly all the US pre-orders with the full credit. The last deliveries will at least get a 50% credit. All assuming no major delays and the 200,000th US Tesla is delivered at the very beginning of a quarter. This leaves nearly six months of full tax credit for all deliveries, six months of 50% tax credit, and six months of 25% tax credit.

If US orders made up half of all the current preorders then they'd need well under 200,000 cars in a six month timespan to maximize the full credit option. Less if the model 3 starts rolling out before the 200k mark.

You understood my thought correctly, and your point is well taken. My hope is that some level of priority is given to those who reserved before the announcement - I intend on having a good level of options on my car, but not fully optioned, and would be disappointed if they couldn't be delivered in the time of the tax credit. Given that a lot of the orders would have been international, you're right that we should be in good shape. I have no issue waiting for my car as long as it doesn't mess up the eligibility of the tax credit.

 

[FlatSix911]

The Federal tax credit will most likely be phased out in 2018 ...
An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not

 

[Troy916]

The Federal tax credit will most likely be phased out in 2018 ...
An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not

That page is not correct, it stated "The US Law states that after 200,000 is reached, customers will receive $3,750 for the following 6 months with no apparent limit on units." As JeffK stated about, after the 200,000 is reached, the next 2 quarters (6 months) is still at the full limit, then it starts dropping.

 

[Snerruc]

Alot of people buying 3's will not have a tax liability of $7500. Always using $7500 in their ads is misleading for most people. Do you guys have that high a tax liability? I sure don't, and My income is well over $100K.

 

[xav-]

We owed the federal government $6k this year. that's with 0 dependents. We rent for now. Not sure how you can pay this little making over $100k.. Lots of kids, large mortgage?

 

[Snerruc]

We owed the federal government $6k this year. that's with 0 dependents. We rent for now. Not sure how you can pay this little making over $100k.. Lots of kids, large mortgage?

Old and tax smart. At most you pay 10% on dividends and nothing on tax free bonds. Buy a house as soon as possible, IRAs help. Consult a good CPA/ tax advisor. DON'T DO ANYTHING EVEN REMOTELY ILLEGAI! Sometimes making a little less is better if you are on the edge of a tax bracket. I know a doctor who paid over $50,000 last year because she was between houses. She is getting help and will pay a lot less this year. Note: if your tax bill is 6 k, you only can use that much of the credit.

 

[Booga]

Alot of people buying 3's will not have a tax liability of $7500. Always using $7500 in their ads is misleading for most people. Do you guys have that high a tax liability? I sure don't, and My income is well over $100K.

Are we talking about the same number? Even if you "owe" $0, you can get the $7,500. It's about what you paid throughout the year - if you paid over $7,500, you'll get it. I made less than $100k and paid well over $7,500 in federal taxes even with a 401k deduction, which reduces my federal income taxes. If needed, you can direct contributions away a tax-deferred retirement account to one that is after tax, which increases your federal taxes for the year.

 

[Snerruc]

Are we talking about the same number? Even if you "owe" $0, you can get the $7,500. It's about what you paid throughout the year - if you paid over $7,500, you'll get it. I made less than $100k and paid well over $7,500 in federal taxes even with a 401k deduction, which reduces my federal income taxes. If needed, you can direct contributions away a tax-deferred retirement account to one that is after tax, which increases your federal taxes for the year.

Total income tax bill approx $2100. Actually, If I understand XAV he is probably pretty tax efficient. What I was saying is that a lot ,if not most, m3buyers, Have tax liabilities LESS than $7500. That is exactly his case. I know people that make less than $80k that drive $50k pickups. They are a target demographic for this price range vehicle. Their tax bill is closer to mine than his. This is one case where tax efficiency bites you in the ass. Same for going solar.

 

[FlatSix911]

The Federal tax credit will most likely be phased out in 2018 ...
An early Tesla Model 3 reservation could determine if you get the $7,500 US tax credit or not
View attachment 181419

That page is not correct, it stated "The US Law states that after 200,000 is reached, customers will receive $3,750 for the following 6 months with no apparent limit on units." As JeffK stated about, after the 200,000 is reached, the next 2 quarters (6 months) is still at the full limit, then it starts dropping.

The graph is correct ... that is why I said the tax credit will be phased out in 2018.

 

[EVNow]

Total income tax bill approx $2100. Actually, If I understand XAV he is probably pretty tax efficient. What I was saying is that a lot ,if not most, m3buyers, Have tax liabilities LESS than $7500.

A single person making $30k a year (i.e. minimum wage of $15 an hour) pays $2.5k in federal tax. Even our nanny makes more than that !

Almost all non-retired people who can afford a $35k car would be paying more than $7.5k in tax.

Update : Found some interesting stat. Here is the median income of luxury car buyers in various states.

http://www.nytimes.com/2014/11/19/your-money/in-sales-of-luxuries-geography-matters-.html?_r=0