Model 3 demand question

[insaneoctane]

I'm scratching my head over the advertised 2-4 week delivery window. Production rates are around 1K/day, right? With the US tax credit about to half again fairly soon and prices are about to go up 3% within days (except for $35K) demand seems like it ought to be very strong, possibly resulting in people who want their cars before the US fed tax break halves missing out. Yet somehow, even with shipping cars overseas, Tesla only has a backlog of 2-4 weeks? That's only 14K to 28K Model 3s. Doesn't that sound like a demand problem? Maybe I'm missing something, but when Tesla had many months of backlog, I wasn't concerned. I realize Tesla still has the lease lever, and increasing international demand, but it doesn't seem like 10K/week is a necessary target. What minimum rate does Tesla need to maintain on the line in order to keep efficiencies high enough to allow the $35K or $37K car to still be profitable.

 

[SergeyUser]

What minimum rate does Tesla need to maintain on the line in order to keep efficiencies high enough to allow the $35K or $37K car to still be profitable.

Given that they do not expect to be profitable in Q1, the volume required is likely more than its current levels.

 

[woodisgood]

I think you’re right - the demand is not as high as they need it to be. This is why they have to get leaner (if they can).

 

[RyanT]

US is being greatly prioritized now. Standard Range says 6-8 weeks, that would be something like 40-50k cars in 2 months. Before the model 3 they were only making 80k cars a year.

 

[miimura]

The last ship taking Tesla vehicles overseas was docked more than two weeks ago. Tesla must have been producing cars for US delivery for most of the month of March. I think they will push for 1Q deliveries and if they still need to pull another demand lever for Q2, there is always leasing. If they need to stimulate demand further, they could unbundle some of the options like separating the interior choice from the battery size. Base interior or Partial Premium with Long Range sounds enticing for people on a budget, but really needing the range.

Also, as the tax credit steps down again, they will start producing cars for RHD markets like Japan, UK, Australia, and New Zealand.

 

[miimura]

TeslaBjorn also commented that the Norwegian Model 3 order page had unusually short lead times. Lead times that didn't even allow for transit time. To me, that means that Tesla produced AWD and P-AWD inventory for Norway and already shipped it. There are 3 shiploads of cars that have arrived this week or are still in transit to Europe. For example, Grand Venus just unloaded at Zeebrugge and is headed to Oslo.

 

[ewoodrick]

I don't think that the 2 week lead times are real right now. I've heard some rumbling that at least some of the dates have been missed.

And we're not due for another tax credit change for 3.5 months and it's only $1700.

The extension of the price increase seems to indicate that there is a demand.

 

[miimura]

Personally, I think the delay of the price increase is to max out the orders that they hope to deliver in Q1. Does the order page show a different lead time if you're in New York vs. California? I can easily see them delivering a car in 2 weeks in Northern California near the factory.

 

[MrMassTransit]

I was shocked how fast I got my SR+. Six days from order to delivery. I would not be shocked if demand is weaker than expected. If you look at the top selling cars in the US, everything that sold over 150,000 units a year was either an truck/SUV or had a base price of around $20k. With the tax credit going away, I just can't see the M3 selling more than 150-200k units per year within the US. Now, I have very little sense of foreign demand. Can the rest of the world make up 300-350k units? Maybe.

I think the Y will see a decent amount of demand in the US above that level, and when they get the pickup out, that will do very well. Tesla is positioned well for the long term if they can iron out any remaining quality issues and can expand their service center footprint. It will be tough to be mainstream when folks have to drive hours to the nearest service center, even from reasonably populated places like upstate NY.

In the short run, my opinion is they are in a bit of a cash crunch. I wish they'd just bite the bullet and issue more equity so they can stabilize themselves and continue to grow at a rapid pace. I also think Elon needs to bring in a solid COO. He is great visionary, but he needs someone who can dive into the details, optimize processes, and the like while he concentrates on the big picture. Much like how SpaceX is run - where there is far less margin for defects or unexpected issues.

 

[pipestem]

What happened to the great mass of supposed reservation holders supposedly waiting for the SR?

 

[jjrandorin]

What happened to the great mass of supposed reservation holders supposedly waiting for the SR?

They either got tired of waiting and bought other cars, or bought MR cars.

 

[PoitNarf]

They either got tired of waiting and bought other cars, or bought MR cars.

Or perhaps they were also counting on the full $7500 credit being available when the SR was released.

While it does appear that the order backlog is lessening I still think Tesla will continue producing ~7000 Model 3’s a week and getting them into buyers hands shortly after.

 

[Vitold]

Winter is not a popular season for buying sedans. Demand will only increase from here.

 

[destructure00]

I don't think that the 2 week lead times are real right now. I've heard some rumbling that at least some of the dates have been missed.

Mine said 2 weeks for AWD Performance when I placed my order. That was 10 days ago and I haven't heard anything. Been checking the order tracking sheet and there's a few orders older than mine with no updates as well. So I'm not optimistic about hitting the 14 day target, although they could still come through at the last minute.

 

[jjrandorin]

Or perhaps they were also counting on the full $7500 credit being available when the SR was released.

While it does appear that the order backlog is lessening I still think Tesla will continue producing ~7000 Model 3’s a week and getting them into buyers hands shortly after.

I agree that a lot did (and when that was no longer possible, canceled). I said on some other threads around the "35k model 3" that its my belief that people were NOT looking at that as a 35k car, they were looking at it like a (in california at least) 25k car. 35K minus 7500 in federal tax credit, minus 2500 for the state incentive, not counting "gas savings" that tesla always throws in there.

The website pricing is one of the issues I have with tesla.

Anyway thats not this thread. I dont think there is a huge backlog (definitely not "months" and has not been for quite some time, given my own experience of deciding to buy a tesla after a test drive in late november of last year, and taking delivery less than 10 days later).

 

[miimura]

The other thing to consider is that Tesla has so drastically cut down the options that they can produce cars a little bit ahead of time and send them across the country. When you place your order they are really just matching your order to a car in inventory. If they follow the data and produce the correct number of each color and trim the customer's lead time will be short. We should not think of it like they have nothing to do in the factory until a specific car is ordered.

 

[astrowunder]

I'm scratching my head over the advertised 2-4 week delivery window.

Like most Tesla estimates, I would put good money they are pulling those timelines right out of their tail pipes. I predict people will be ignored for at least 3 weeks, then after the customer prods them, they'll give out another identical estimate of 2-4 weeks. Then after 5 weeks and the customer contacts them again, they'll get an apology and say just one more week. Then they'll be contacted in 9 days saying their delivery will be the following week. Then the day before the delivery they'll get delayed again... You get the idea. Actual delivery time will end up being a couple of months. I'm speaking from experience, in case you couldn't tell

 

[jjrandorin]

Like most Tesla estimates, I would put good money they are pulling those timelines right out of their tail pipes. I predict people will be ignored for at least 3 weeks, then after the customer prods them, they'll give out another identical estimate of 2-4 weeks. Then after 5 weeks and the customer contacts them again, they'll get an apology and say just one more week. Then they'll be contacted in 9 days saying their delivery will be the following week. Then the day before the delivery they'll get delayed again... You get the idea. Actual delivery time will end up being a couple of months. I'm speaking from experience, in case you couldn't tell

Maybe your signature is not correct? It says "ordered 9/11/18 - delivered 10/4/18. Thats not quite a month, so, your experience is not as you described in your example.

 

[astrowunder]

Sorry- my specific experience was that I had 6 reschedules in 1 month, but the performance cars were shipping much faster than the lower models. I'll be very surprised if the bulk of current sub-40k orders get delivered within 1 month.

 

[astrowunder]

And 3 of those 6 would have caused me to drive 3 hours arriving without my car if I hadn't called ahead, been on hold for quite a while, then the answer kept coming back- no the car is not here yet. Sadly I've seen a couple of recent post with very similar stories. You would think they would have better tracking of their inventory by now.