So there are 400,000+ people waiting on the $35k version?

[u00mem9]

With the announcement of abandoning the reservation system for all versions except the standard model 3, the only conclusion I could come to is stated in the subject line.

This seems like a slight problem. If you are forecasting a $10,000 loss on the standard model... that works out to $4B in loss waiting for you when you finally deliver to customers that waited in a line 2+ years ago. (I’m speculating based on not quite making money on the 49k model until the volume gets to 5k per week, etc.).

 

[P85_DA]

Not sure what this is based on ..are you saying you know 400k haven’t confirgred their car since reservations opened for all ?

 

[commasign]

I posted this in another thread, but here's my napkin math:

New order for an LR car has an estimate of 3-5 months. 5 months = approximately 20 weeks. 20 weeks x 5000 cars/wk = 100k cars.

So I interpret that as Tesla being very confident it can sell 100k LR cars (RWD PUP, AWD PUP, and P) to USA and Canada over the next 5 months.

Beyond that we can only speculate, but worst case scenario is that the remaining 300k original reservation holders (I'm assuming that there aren't that many new orders that aren't already reservation holders) are either outside North America or waiting for the SR variants (RWD PUP, RWD non-PUP, AWD PUP, AWD non-PUP). I don't think worst case scenario is likely. Many people will spring for PUP, AWD, and/or EAP all of which are profitable options for Tesla. And then considering all the orders outside of North America, many of those will be for LR AWD and P variants. I think the base $35k car will be the least popular version overall.

 

[kengchang]

The German tear down of LR was 28K @ 10K run rate, SR is going to be way less than 28K.

 

[u00mem9]

The German tear down of LR was 28K @ 10K run rate, SR is going to be way less than 28K.

I’m pretty sure the German tear down made some efficiency assumptions that are laughable at this point. Let them know the 3rd shift is reporting for duty at the tent...

I think comma signs numbers aren’t far off. But if a significant number of the 400k holdouts were waiting for the AWD, I still cannot understand why the reservation method was abandoned now? Odd.

 

[P85_DA]

I think reservation was abandoned because they are confident in their ramp up , supply chain and demand for AWD ,LR and P as Comma noted

 

[commasign]

But if a significant number of the 400k holdouts were waiting for the AWD, I still cannot understand why the reservation method was abandoned now? Odd.

Pure speculation, but Tesla probably has a good estimate of their conversion rate from existing reservation to actual order, and maybe those numbers showed that at current production rate there wasn't much difference in delivery times for existing reservation holders and new reservations. Plus it's nicer to have $2500 non-refundable deposit vs a $1000 refundable reservation.

 

[u00mem9]

I think reservation was abandoned because they are confident in their ramp up , supply chain and demand for AWD ,LR and P as Comma noted

Can you restate that? The reservations ARE the demand. I’m either missing your point or you’re just stating meaningless platitudes.

The AWD reservations were able to order in May, right? If we use the 100k unit estimate, why try to fill the line assignments past the end of 2018? I thought the standard model start was within 2018, right?

I think it’s a case, where they now want to invite anyone in the country to order a LR PUP rwd before they have to finally build the SR. I’m surprised there aren’t more reservation holders crying foul. The goal posts for them have moved from:

First in line, first served

Sorry, after the current S/X owners

Sorry, after the LR reservations

Sorry, after the AWD and Performance reservations

Sorry, after we make a profit

...2 quarters in a row

Sorry, after we build any car for any person walking the street that ISN’T a SR trim.

 

[JohnSnowNW]

Why would you abandon the reservation system for a vehicle you're not making yet, nor are you going to be making for nearly 6 months?

That's quite the leap, to assume that most are waiting for the SR version, even more that they're waiting for the bare bones trim. For instance, we were waiting for SR AWD, but will probably end up ordering an LR AWD in Aug/Sept. to take advantage of the full tax credit.

 

[P85_DA]

I think that is what will drive demand now ...Tesla finally confirming the phase out of tax credit end of year ..that said 7500 credit doesn’t cover the delta in price between SR and LR loaded up ..as another poster noted there is definitely demand for the pricier vehicles

 

[deonb]

If you are forecasting a $10,000 loss on the standard model... that works out to $4B in loss waiting for you when you finally deliver to customers that waited in a line 2+ years ago. (I’m speculating based on not quite making money on the 49k model until the volume gets to 5k per week, etc.).

Wow, you've certainly beaten the crap out of that poor straw man. Give the guy some warning next time!

 

[commasign]

To be clear, the reservation system hasn't been abandoned completely. Those who waited in line on 3/31/16 will still be the first to get the $35,000 car if they want (though I'd also speculate that those folks would need to confirm their order very soon after the SR car becomes available to order, i.e. they can't just sit on it and assume they can jump to the front of the queue whenever they want). Tesla just isn't taking NEW reservations.

 

[commasign]

The reservations ARE the demand.

I don't think that's completely true. I have multiple friends and family who placed $1000 deposits who still aren't sure they even want a Model 3, even the $35000 version. There was certainly a lot of hype and FOMO on and around 3/31/2016. Only confirmed orders truly equal demand.

 

[P85_DA]

you’re just stating meaningless platitudes.

..your are talking about your original title not my post ...

 

[Marsnaut]

I'd be surprised if people don't spring for at least a few options. Even 30% uptake on EAP would do wonders for the bottom line.

 

[commasign]

Look, I totally sympathize with those that waited in line on 3/31/2016 and placed a $1000 reservation expecting to get a "$25,000 Tesla" (after federal and state incentives). That possibility is fading quickly. But having been watching this play out since 2013, I would bet money that Tesla will deliver some $35,000 cars in 2018. It won't be a lot, but there will be some. My guess is if you were in the front of the line at your local service center on 3/31/2016, AND you place your order as soon as the SR non-PUP option becomes available, you will get the promised car. Just a guess, but that's what I'm hoping.

 

[Electroman]

This seems like a slight problem. If you are forecasting a $10,000 loss on the standard model... that works out to $4B in loss waiting for you when you finally deliver to customers that waited in a line 2+ years ago. (I’m speculating based on not quite making money on the 49k model until the volume gets to 5k per week, etc.).

$10k loss? Who said that? Business Insider is your source? If you are going to make your own numbers, make it more interesting like $30k loss !!

Musk said sometime in April, that making the base model now (in April) when they have not hit their high production volume rates, would be a money losing proposition. He didn't say anything about LR. It is fairly easy to speculate - unless you are a hater that wants to spready lies and rumors - that LR + PUP + AP is highly profitable. SR will be profitable once they hit volumes. The expectation is 6k/week would do that.

Again this is nothing new. Every base model (for every manufacturer) will be a loss leader, and that is why dealers rarely stock them up. It is used mostly for advertisement to lure the shoppers in. But if you look hard you can get a base model at rock bottom price.

 

[HeinrichJ729]

I bet many on that 400,000 segment are waiting to sell a current car, have their current lease expire, or waiting to time their finances better for the purchase. The key thing is that Tesla's reservation count has remained steady or increasing.

Also they just announced the AWD and performance option. I bet many who were not planing on getting either will end up getting one or both of those options, especially with the tax credit expiring this month.

 

[Sneakerbuddy]

I still think the reservation and delivery numbers have a terrible inconsistency. How can all these observations/facts be true:
- 420,000 reservations as of May (per Musk) for a car that doesn’t exist ($35K version) and wont exist until at least 2019 . That many people who just leave $1,000 sitting around for years?
- 420,000 reservations from people who are willing to pay $35K but not $49K with a long range version.
- 420,000 reservations for a car that has lost or losing subsidies in US; Ontario; Hong Kong; and Norway. And would be facing tariffs in China? For a car now facing massive competition in Europe and China; for a car that does not conform to EU charging standards??
- Tesla dropping price on performance version; announcing test drives; adding sales commissions; shipping more demo models - for a car with a 420,000 wait list??
- 11,000 M3 built in June with production now at 4,000 per week means they should be delivering almost 30,000 cars in July which is FIVE times their delivery volume of Q2 - yet we are seeing no evidence of deliveries ramping (per Troy’s spreadsheets which have been spot on so far.)

I just dont see it people.

 

[kengchang]

I still think the reservation and delivery numbers have a terrible inconsistency. How can all these observations/facts be true:
- 420,000 reservations as of May (per Musk) for a car that doesn’t exist ($35K version) and wont exist until at least 2019 . That many people who just leave $1,000 sitting around for years?
- 420,000 reservations from people who are willing to pay $35K but not $49K with a long range version.

420K reservation is global reservation not US/Canada only.

- 420,000 reservations for a car that has lost or losing subsidies in US; Ontario; Hong Kong; and Norway. And would be facing tariffs in China? For a car now facing massive competition in Europe and China; for a car that does not conform to EU charging standards??

What competition? Bolt? I-Pace? Tesla already added China's adapter, Tesla will do the same for Europe.

- Tesla dropping price on performance version; announcing test drives; adding sales commissions; shipping more demo models - for a car with a 420,000 wait list??

Instead of one large bundle, Tesla opted to break it out to increase take rate on the Performance trim.

- 11,000 M3 built in June with production now at 4,000 per week means they should be delivering almost 30,000 cars in July which is FIVE times their delivery volume of Q2 - yet we are seeing no evidence of deliveries ramping (per Troy’s spreadsheets which have been spot on so far.)

I just dont see it people.

11K Model 3 were in Transit to customers, with 50xx built in the last week. Sorry to bust your bubble but non-day one people mostly like don't care about the spreadsheet.