Tesla Model 3 Orders Exceed 325,000
The stunning demand for Tesla's $35,000 sedan, expected to arrive in late 2017, could point to a potentially huge market for mid-priced electric cars.
When Elon Musk unveiled the Model 3 at a lavish event at Tesla's Hawthorne, Calif. design center on March 31, he closed the presentation by noting that Tesla had so far that day taken 115,000 deposits, at $1,000 per car, for the sedan, which will have a range of 215 miles and not enter production until late 2017.
After Musk left the stage, a huge counter began tracking incoming orders. Half an hour later, the number of Model 3s ordered stood at 130,700, and 24 hours after the unveiling had climbed to 180,000, twice the number expected and the highest single-day sales of any product in history, Tesla later claimed.
Today, Musk announced on his Twitter account that Tesla had booked more than 325,000 orders for the Model 3 in one week, which he said represented $14 billion in pre-orders (The $1,000 deposits are refundable until the car enters production.) Musk has predicted that Model 3 pre-orders will hit 500,000 if the current pace continues.
The robust demand for the Model 3 — as well as Tesla's Model X SUV and Model S sedan, which owes its ubiquity to Hollywood early adopters like Steven Spielberg and Jon Favreau, a close friend of Musk — is indicative of the fierce brand loyalty Musk has conjured around Tesla. The fact that hundreds of thousands put down large deposits on a car that may not arrive for two years speaks to the viability of moderately priced long-range electric cars — the Model 3 will have a range of 215 miles — at least those with Tesla's cachet.
General Motors will actually be first to the market segment late this year with the Bolt, a $30,000 electric with 200-mile range minus the status pretensions of the Model 3, which Musk predicts will cost closer to $40,000 after options and will compete with entry-level luxury sedans from BMW, Audi and Mercedes.
With demand for the Model 3 exceeding expectations, Tesla now faces the challenge of manufacturing an entirely new car even as it struggles to keep up with demand for its Model X. Introduced last September after years of delays, the Model X is slowly working through a backlog of only 20,000 orders. Tesla alarmed analysts when it announced it had shipped just 2,400 Model X's in the last quarter — Musk blamed "hubris" for loading the Model X with complex features, including upward-opening falcon doors, that make it challenging to mass manufacturer. Musk earlier pledged that Tesla will sell 500,000 vehicles a year by 2020.
The magnitude of demand for the Model S will test Musk's ability to ramp up production while simultaneously bringing online Tesla's gigafactory, a $6 billion facility under construction in Nevada that is meant to churn out lithium-ion batteries at economies of scale that will allow the Model 3's $35,000 price point.
By the time the Model 3 goes on sale in late 2017 at the earliest, the $7,500 federal tax credit for electric cars may be — the incentive begins to phase out when a U.S. manufacturer's sales exceed 200,000 electric cars, and Tesla's cumulative Model S and Model X sales this year are expected to reach 140,000.