Over 250,000 reservations is great, but in the end, it will come down to profit margins. If they only make $1,000 profit per car, they are in trouble. If they make $10,000 per car, the stock and the value of the company takes off to Mars.
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Yes, this is a real question in bear cycle. Right now, people will just chase the fenzy of reservation number in bull cycle.
BriansTesla
Old school meets new tech
I would say $1000 on a base model early production, $10,000 on a fully optioned with all margins increasing as battery prices come down and other components scale.
Tesla supplier gets a call: About that prototype part you made for us? Well, we are going to need a half a million of those in the next three years.
As long as they grow 50% per year, there's no point thinking about 'the end'. Profit will only become meaningfull when their growth drops below 20% per year. That probably wont be in the coming 10 years.
Krugerrand
Meow
Pick up the phone and beg your butt off to partner with Tesla in it all. With their help and creativity you can save yourself and help them save the world. You've got the factories that can help produce the Model 3 and at least a couple of those can be cleaned out and prepped for Tesla while another one can be cleaned out and prepped for your own EV built on Tesla's platform. And so on. This could be done to everyone's benefit.
One of the main reason GF lagging behind is Panasonic and other potential partners were not sure about model 3 demand. Now with sky high reservation number, We'll soon see Panasonic commit $1B and other partners jump on the boat for the rest of $2B as planned in 2014. Tesla just needs to raise fund for factory update for M3 instead of building both factory and GF by itself. It just matters capital to boot production capacity, I think Tesla will work TRUELY hard from now on to ramp up the production instead of the slow pace in last two years.
When I read through the lines in the past news, Ford and a few other companies tried the begging approach. They said Tesla prefer to do it alone. They are quite disappointed.
There was speculation that Elon/Tesla wont publish reservation count if it gets to high as it is too precious data to let it out just like that.
As nothing happens just like that, what is Elon up to? Why is he pumping the pump?
As nothing happens just like that, what is Elon up to? Why is he pumping the pump?
With battery chemistry improving over time their margins will keep going up and up. Even if they start with something fairly slim that's not something to worry about.
Krugerrand
Meow
I doubt that. Elon Musk/Tesla have always been open to working with others, otherwise they wouldn't have opened their patents or publically said the SuperCharger Network was available for others as long as they complied with the basic rules set forth for them and customers.
Base model will not have $10k margin. On the surface it sounds right. Shorts and a few analysts will think this way. I can't agree with them. The model 3 is a clear confirmation that Tesla is the new Apple, in the early stage. If down the road Tesla raises price by 10%, do you think these buyers will disappear? It will not change my order. No other cars can get close. Also, most people will order options, those options can have nice margin. Tesla is on it's way to dominate the car and energy storage sectors. Once people realize that, they will see the company is quite under valued. For many years Amazon doesn't have profit, but because it's going to dominate the online business, some people can see it's value. Recent Amazon move is related to the cloud success. Tesla also has additional business in the cards. Those will happen in the future.
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He is pumping because he can..to get as many reservations as possible..so he can raise before Q1 ER.
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I didn't make it up. Ford mentioned it. You can find it in the news when Ford announced they will have a joint venture with Google Car. Ford didn't say the exact name, you can tell they were referring to Tesla. Apparently Ford doesn't have a proper judgement about themselves and Tesla. I am not surprised. Remember not long ago Ford's CEO said autopilot or autonomous driving will not work. He gave an example why it will not work: If the car faces a dilemma, go left to hit an old guy, or go right to hit another guy, the car can't make the decision. I thought that's really dumb.
Opening patent is one matter, working jointly is different. Tesla prefers to work alone. I totally support this approach. Tesla really doesn't want to have a 50/50 partner in China, they tried, but no way around it.
Guys, Elon is just a genuine, intelligent, hard working guy, don't assume there is always a secret agenda.
If the whole market fully understand the model 3 advantage, the demand for model 3 is more than 10 million a year.
Krugerrand
Meow
Nope, don't buy it (Tesla preferring to work alone). They've done everything to indicate otherwise. They dragged Panasonic kicking and screaming. I do recall that Ford article. If in fact they did talk to Tesla, I'm more inclined to believe that Ford simply wasn't serious enough and didn't like the terms that Elon Musk would have laid out - that's not 'begging' and right now begging is the way to go if you want to save yourself. Get on the train or get out of its way. Getting on the train is going to require a lot more effort now because it's moving. The chance to get on it while it was still has passed.
It is starting to look obvious that there is an unpublicised agenda up to Q1 ER. Thereafter it is open to much more speculation.
Edit] Look at it the other way round. If he wanted to raise before before Q1 ER, what would you expect him to do now? My answer: exactly what he is doing now.
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FredTMC
Model S VIN #4925
Not so "SECRET" plan for scaling up Model3 production:
just like MS and MX, the first Model 3s off the line in 2017 will be loaded cars (fully optioned). There's zero doubt in my mind you'll get your car faster if you choose a "loaded" car.
Since there is much higher Gross Margin in a fully loaded car, tesla's gross margin will be fine on the first couple quarters with all these loaded cars getting delivered. Later, when Cell Cost (economies of scale) kick in and assembly line is humming at higher rate, the base model of Model3 will start to have acceptable GM to deliver.
Also, I highly doubt the avg ASP will be $42k (as Elon tweeted). In the first year of production ASP will be easily over $50k.
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