Model S/X Owners Have Priority Model 3 Orders Over Non-Owners

[ELRev]

I find it odd that when you compare the Model S and the Model 3 pricing, you add almost 50% in options to the S to compare to a base (AKA: stripped) Model 3. The Model S starts at $70,000.

I appreciate your point, but let me explain my logic. The figure is certainly not the most scientific number I could've provided, but as a rough estimate, I think there's a difference for these reasons.

Firstly, without mentioning this in my post, I, in part, was considering the likely price increase we'll see for the Model S before the Model 3 goes into production.

I'm also taking into consideration both research I've done and experience I've had discussing with Tesla owners I know, as well as Tesla employees, that very few people who purchase a Model S do so without adding additional features. AWD, Sun Roof, Autopilot, Leather Seats. These and a number of other options seem significantly more popular than the base, $70000 Model 3. That's to say nothing about the "elitist" pricing nature of the car but more about the tendency of the customer. Generally speaking, it stands to reason that any person willing to purchase a Model S/X in order to earn priority on the Model 3 will spend more on that S/X than they'll even be capable of spending on a fully optioned Model 3.

Lastly - and in part to one of your points - you're correct that plenty of people have stretched to afford a Model S that ordinarily wouldn't have spent that much money on a car. Those are the people whom, I would expect in this scenario, to now wait to purchase a significantly cheaper vehicle in the Model 3. Whereas, in the case that purchasing a Model S/X wasn't a stretch and the customer could afford typical upgrade options that many S/X customers select, now those people have an opportunity to purchase a more average-priced car without the strain.

Surely my post wasn't the most well-outlined argument, but I certainly don't agree that I fell into the trap you're referencing, and I do think the point holds merit.

 

[mark]

I hope it's some consolation to the non owners that there is a one priority reservation per Tesla limit.
See excerpt from email below:

And as a thank you to our current owners, existing customers will get priority in each region (one priority reservation for each Tesla they own).

 

[MassModel3]

I appreciate your point, but let me explain my logic. The figure is certainly not the most scientific number I could've provided, but as a rough estimate, I think there's a difference for these reasons.

Firstly, without mentioning this in my post, I, in part, was considering the likely price increase we'll see for the Model S before the Model 3 goes into production.

I'm also taking into consideration both research I've done and experience I've had discussing with Tesla owners I know, as well as Tesla employees, that very few people who purchase a Model S do so without adding additional features. AWD, Sun Roof, Autopilot, Leather Seats. These and a number of other options seem significantly more popular than the base, $70000 Model 3. That's to say nothing about the "elitist" pricing nature of the car but more about the tendency of the customer. Generally speaking, it stands to reason that any person willing to purchase a Model S/X in order to earn priority on the Model 3 will spend more on that S/X than they'll even be capable of spending on a fully optioned Model 3.

Lastly - and in part to one of your points - you're correct that plenty of people have stretched to afford a Model S that ordinarily wouldn't have spent that much money on a car. Those are the people whom, I would expect in this scenario, to now wait to purchase a significantly cheaper vehicle in the Model 3. Whereas, in the case that purchasing a Model S/X wasn't a stretch and the customer could afford typical upgrade options that many S/X customers select, now those people have an opportunity to purchase a more average-priced car without the strain.

Surely my post wasn't the most well-outlined argument, but I certainly don't agree that I fell into the trap you're referencing, and I do think the point holds merit.

I don't buy that logic. You're using for a basis of comparison a price increase that hasn't happened and we have no idea what that increase may be. You're assuming people who can afford a Model S are thereby likely to afford every amenity they want. You're assuming that people who buy a Model 3 are going to want a base model and won't be able to afford leather seats or a sun roof.

You're also failing to take into account the fact that the average purchase price for a Model is is somewhere between $80 and $90K (depending on the website you hit, though most seem closer to $80K). Now that tech and supercharging are included in the pricing of every Model S, you get a lot more S than you could a year ago for the same price.

And, there are a LOT of people in the Model 3 forum here who have posted their target price they'll pay to be well above the $35K base. Some have said they're willing to go up to $60 or $70K. They just didn't want to have to go up to $140K to get the same options on an S.

Okay, all this is a bit off topic. Moving on.

 

[gregincal]

Generally speaking, it stands to reason that any person willing to purchase a Model S/X in order to earn priority on the Model 3 will spend more on that S/X than they'll even be capable of spending on a fully optioned Model 3.

This is the part I don't understand at all. I would expect anybody that has the money to buy a Model S in order to gain priority on getting a Model 3 has the money and desire to get an absolute top of the line Model 3. Basically I would expect them to buy the cheapest Model S they can possibly get and then trade it in for a top of the line Model 3.

 

[Sp4rky]

I had posted a reply saying "Such as?", but then I read the article linked in your post: Elon Musk hires Apple’s alloy expert to lead materials engineering at both Tesla and SpaceX

There's some good examples of cross-pollination there. OK, I'll acquiesce. I won't like 5000 people moving in front of me, but I'll stop grumbling about it...

We also have to remember that:
1.) Not all employees of Space X and Tesla will be reserving Model 3's By using an aggressive number (80%), we're still looking at 16k employees getting first dibs. I'd argue the number being more likely two-thirds of employees ordering Model 3's. That would come out to around 13.2k employees.
2.) How many of those employees will be ordering a PXXD configuration? Again, that will lower the number of employees of both companies getting priority over owners and non-owners ordering a PXXD.
3.) While a majority of the employees do work in California, not all of them do. If Tesla is going by region, I would imagine all of the employees, then owners, then non-owners in California would get their cars before moving to the next region.

I feel like people are blowing the whole employee reservation thing out of proportion. Again, this is just my opinion though. Feel free to criticize.

 

[ELRev]

I don't buy that logic.

Apparently lol I wasn't basing my argument on a price increase that hasn't happened yet. I took it into account in my mind for the briefest of moments while typing. My entire argument had very little to do with the numbers you highlighted. The point I was making had to do with Tesla's being perfectly willing to sell significantly more expensive (whether $65k more, $35k more, or whatever the number is) cars, and thus earning that revenue upfront - 2 years before Model 3 production - even if that means seeing them end up on the resale market. I don't expect that more used Teslas on the market means significantly lower resale values to the point that Tesla should be concerned.

Everything you're talking about, when directed at the people you compared the subordinate clause from my first post to, I completely agree with. I just picked a number out of the air to highlight the significant difference. $35k is the base price difference. That's also the price of the Model 3. Anyone straining to buy a Model S just to earn priority on a Model 3 is paying one hefty price to do so.

This is the part I don't understand at all. I would expect anybody that has the money to buy a Model S in order to gain priority on getting a Model 3 has the money and desire to get an absolute top of the line Model 3. Basically I would expect them to buy the cheapest Model S they can possibly get and then trade it in for a top of the line Model 3.

Simply put, I was referencing the fact that a Model S/X can be optioned well beyond the likely price of a fully-optioned Model 3, because the base price is so much higher. Not commenting whatsoever on the customer's capacity to afford either option.

 

[sports4eva115]

We also have to remember that:
1.) Not all employees of Space X and Tesla will be reserving Model 3's By using an aggressive number (80%), we're still looking at 16k employees getting first dibs. I'd argue the number being more likely two-thirds of employees ordering Model 3's. That would come out to around 13.2k employees.
2.) How many of those employees will be ordering a PXXD configuration? Again, that will lower the number of employees of both companies getting priority over owners and non-owners ordering a PXXD.
3.) While a majority of the employees do work in California, not all of them do. If Tesla is going by region, I would imagine all of the employees, then owners, then non-owners in California would get their cars before moving to the next region.

I feel like people are blowing the whole employee reservation thing out of proportion. Again, this is just my opinion though. Feel free to criticize.

good points! I would think that it's a proportion thing, regarding region. Once X% of a region's orders have been satisfied, Tesla will move onto the next region. So it could be that California's non-owners are still waiting for their cars, but Tesla already started delivering M3's to Oregon employees/owners, and because there are far fewer Tesla employees/owners in Oregon than in California, Oregon non-owners might start getting their M3's before California's. THAT'D BE SAD T_T

 

[MrBoylan]

Deliveries will probably be prioritized in this order:

1. Region/geography
2. Options
3. Model S/X Owners
4. Reservation Date

I agree but I believe there may be some interplay between these factors and some exceptions. If we're using Model X as an example, even the California customers who ordered a 70D Model X don't have cars while P90D buyers in NY and Florida do (including people who reserved their cars much later).

Also, I don't think reservation date will have any direct bearing on order prioritization. That will only get people access to the design studio sooner. It's actual order confirmation date which gets you in the queue, not the date your original reservation was placed. And with the X they opened the design studio in such large batches that someone who ordered the car a full year or two later than someone else could confirm their order at approximately the same time (or within a week or two). They may change this for the Model 3 but I doubt it.

Also, you didn't mention employee orders. IMHO, the employee reservation list probably won't be larger than 5000 orders (which is roughly 40% of all employees) - and probably much lower - but I expect even those orders will be prioritized by build (by options) with the highly optioned orders being built first. My guess is that there will be some non-owners that get their Model 3 cars before owners, and even before Tesla employees, if they order highly optioned cars.

Speculation at this point, but speculation based on past results.

 

[MrBoylan]

We don't know the details about owners getting priority. I would expect there to be an "expiration." Let's see what the deal is before the doom and gloom.

Although I still haven't seen any confirmation (or even much speculation) about this, I think there's a good possibility that only *current* owners will get an early invitation to the online order system, just like employees got access to that system earlier this month. I expect owners will be getting this invitation via e-mail some time between now and March 30th. Those owners who are eager enough to put their deposit down before 3/31 will get into the queue right behind the employees. And then anyone who goes to stores on 3/31 will be next, followed by those who order via the web site starting at 8:30 PST. This would limit the number of owner reservations and would still give those eager beavers standing in line or camping out at the stores a pretty low reservation number.

But I admit I could be completely wrong here. They could extend owner order priority much longer.

 

[Burlingame X]

Although I still haven't seen any confirmation (or even much speculation) about this, I think there's a good possibility that only *current* owners will get an early invitation to the online order system, just like employees got access to that system earlier this month. I expect owners will be getting this invitation via e-mail some time between now and March 30th. Those owners who are eager enough to put their deposit down before 3/31 will get into the queue right behind the employees. And then anyone who goes to stores on 3/31 will be next, followed by those who order via the web site starting at 8:30 PST. This would limit the number of owner reservations and would still give those eager beavers standing in line or camping out at the stores a pretty low reservation number.

But I admit I could be completely wrong here. They could extend owner order priority much longer.

I'm not one to spread rumors, but after having spoken to a sales rep at my local Tesla store, I think previous owners will get a "link" to reserve before the 31st as well. Just wanted to throw my 2 cents into the rumor mill.

 

[esk8mw]

I would argue the opposite and say that non-owner model 3 buyers will be the real folks who will keep the company going. Tesla is currently in a deep hole in terms of debt, signifying that while model s and x are fantastic and super desirable, they're not making Tesla enough money to cover expenses, which makes them fail as a company. Yes, profit from sales of MS and MX went into M3 R&D, but Tesla's R&D will always be a huge money sink because innovation is their main selling point. Tesla is seriously banking on non-owner M3 buyers completely outnumbering MS/MX owners because that's how Elon achieves his mass-market EV, and how Tesla might start really reporting profits every quarter instead of one every few years.
Basically I don't agree with the notion that M3 buyers will never be as important as MS/MX owners/buyers. In fact, M3 buyers will be far more significant and crucial if Tesla is to survive. To that logic Tesla should be trying it's best to encourage new buyers, not rewarding old customers.
Don't get me wrong, loyalty should be valued and rewarded, just don't do it at the expense of losing some new buyers. Lots of people want to join the Tesla family, why not encourage that instead of making Tesla look like an exclusive club?

No, this is incredibly wrong and it drives me nuts when people make such authoritative statements. Tesla makes a fat profit on every car they sell. Like every early stage growth company, they take that profit - and then some, through debt and equity raises that they willingly choose to do - and plow it back into the company to grow the company and increase production at a maximum sustainable rate. Put simply, Tesla could cancel the 3 and future expansion plans tomorrow, decide to be a niche S/X carmaker and be a GAAP profitable company in no time. From a money standpoint, Tesla does not need the Model 3 in any way, shape or form in order to become profitable. They want the Model 3 because it is part of the mission statement, not for its profit margin (it will be a lower margin, high volume car, with enormous capital outlay requirements).

Sorry for the rant, that just hit a nerve. I personally want Tesla to create the 3 and I love the idea of the 3 - I'm ordering one on the 31st, sight unseen.

 

[shrspeedblade]

I can't help but wonder if all this prioritizing is to get the early cars into the hands of Tesla Employees/SpaceX Employees/Previous Tesla Owners who are a little less likely to raise a stink if they anticipate having early teething problems. Not being at the front of the line might not be so bad after all! (I'm trying to look at the bright side.)

 

[MrBoylan]

I can't help but wonder if all this prioritizing is to get the early cars into the hands of Tesla Employees/SpaceX Employees/Previous Tesla Owners who are a little less likely to raise a stink if they anticipate having early teething problems. Not being at the front of the line might not be so bad after all! (I'm trying to look at the bright side.)

Yup, that's what most people think: part reward, part lowered risk of negative buzz for a product that may have some, em, "quirks" when it's first released.

Plus most of the Tesla employees won't have far to go to bring their cars in for service. Some may even end up working on their own cars.

 

[gocken2]

I also believe that the early reservations just means earlier design studio opening. I think the design studio will open for people in the order they place their deposits only (taking time zones into account). The employee cars will not be built in front of the non-owners unless they confirm their configuration first. This may be a likely scenario since they will have access to the design studio first since they put their deposit down already. I think the owners will get the reservation option opened before the 31st. Those that place their deposits before the 31st and only then will be in line in front of those that place deposits on the 31st. Once the M3's are configured I don't think Tesla will even look at the employee, owner, or non-owner status. At that point I believe it will be delivered based on location and configuration.

 

[Nevek]

Why would owner priority need to extend past the initial offer day? Give current owners a shot an an early reservation, sort the March 31st reservation list by employee, owner VIN, regular reservations in the order they were received, then every reservation from April 1 on is sequenced and treated equally.

Yes, the configuration and region will end up determining delivery timing, but by having cut-offs for priorities they develop urgency of making a reservation now. This makes for large initial numbers and good press.

I originally thought they would make owners line up on the 31st at stores, but in thinking about it, they would be better served by taking owner reversations in advance as has been rumored. This would free up store staff to talk up the X, the S and pre-owned S as being available now for prospective new owners.

 

[MrBoylan]

I also believe that the early reservations just means earlier design studio opening. I think the design studio will open for people in the order they place their deposits only (taking time zones into account). The employee cars will not be built in front of the non-owners unless they confirm their configuration first. This may be a likely scenario since they will have access to the design studio first since they put their deposit down already. I think the owners will get the reservation option opened before the 31st. Those that place their deposits before the 31st and only then will be in line in front of those that place deposits on the 31st. Once the M3's are configured I don't think Tesla will even look at the employee, owner, or non-owner status. At that point I believe it will be delivered based on location and configuration.

This is my feeling too. And it would allow Tesla to maintain a single list. Employees of Tesla will have the lowest reservation numbers, SpaceX employees next and owners who configure before the 31st next followed by the rabble (myself included). I would imagine that Tesla may open the design studio to employees who have reservations a few weeks earlier than even the current Tesla owners to give them a chance to confirm their orders soonest (and get their cars first). But yeah, I expect even regular folk with fully loaded configurations will get their cars pretty quickly.

 

[ELRev]

Why would owner priority need to extend past the initial offer day?

Need to? Not sure it does. But it will. They stated specifically in their press release on Model 3 reservations that "the fastest way to buy a Model 3 is to buy a Model S/X." Surely that didn't mean "in the next week." I'm not sure how long it'll last, but I'd say be prepared for it to last basically forever.

 

[sports4eva115]

No, this is incredibly wrong and it drives me nuts when people make such authoritative statements. Tesla makes a fat profit on every car they sell. Like every early stage growth company, they take that profit - and then some, through debt and equity raises that they willingly choose to do - and plow it back into the company to grow the company and increase production at a maximum sustainable rate. Put simply, Tesla could cancel the 3 and future expansion plans tomorrow, decide to be a niche S/X carmaker and be a GAAP profitable company in no time. From a money standpoint, Tesla does not need the Model 3 in any way, shape or form in order to become profitable. They want the Model 3 because it is part of the mission statement, not for its profit margin (it will be a lower margin, high volume car, with enormous capital outlay requirements).

Sorry for the rant, that just hit a nerve. I personally want Tesla to create the 3 and I love the idea of the 3 - I'm ordering one on the 31st, sight unseen.

nope nope nope. If Tesla wants to stay niche and sell high end cars it wouldn't ever have grown as big as it did today. Go look up Ferrari (niche) vs BMW (entry to high luxury) net worth.

 

[gregincal]

nope nope nope. If Tesla wants to stay niche and sell high end cars it wouldn't ever have grown as big as it did today. Go look up Ferrari (niche) vs BMW (entry to high luxury) net worth.

I think these are two different things. The previous poster was saying that they could be profitable just selling Model S and Model X, not that it should be their strategy. You originally stated that those sales didn't make enough to cover the bills, but the only bills they don't cover is the spending to expand the company.

 

[sports4eva115]

I think these are two different things. The previous poster was saying that they could be profitable just selling Model S and Model X, not that it should be their strategy. You originally stated that those sales didn't make enough to cover the bills, but the only bills they don't cover is the spending to expand the company.

Oh yah... Got sidetracked haha... So are you both saying that if Tesla dropped the M3 program right now, they'll be able to recover and start getting a positive cash flow?