Selling Too Many Of The Model 3 - Does Tesla Have A Problem?

Having too many sales to fulfill is likely the best problem any company can hope for.

Unless they will lose money on it. Enter GM with the Volt and Bolt EV.

Having too many sales to fulfill is a nightmare. It products "scalping" if you will and flat out rage when people who have put down deposits are told they have to wait an inordinate amount of time.

Tesla should not have taken all the deposits they did.

Another hype ploy by Mr. Musk.

Out of many dumb things in the Tesla universe, one of the dumbest is that he/Tesla is insisting on building out a plant and assembling the vehicles themselves. Tesla could, pretty easily, farm out production to any number of auto supply chain contract manufacturers around the world who could build his car for him, probably much cheaper than he could do it himself. This fixation on a "factory" is second in the list of idiotic things Tesla is doing, starting with not conducting proper prototype road tests.

If you think about the pro's/con's of building/scaling up your own factory to build a much higher volume of Tesla's versus farming out the extra capacity to a contract firm such as Valmet Automotive in Finland/Poland and Steyr in Germany and the US mid-west, it is completely dumb to build your own fixed capacity.

The flame-out, when it comes, is going to be spectacular - just don't try to catch the 'falling knife' or your hand might get sliced right off if you don't time your bets right!

....or perhaps maybe Tesla spoke to the outsourcers already and they turned Tesla down? When a company is signing a large 3rd party contract, they would have to pass a credit check - however no credit check is required when a company is raising equity from OPM ("other people's money").

Perhaps people should look more closely at the numbers before sending investment and deposit money Tesla's way?

We must be careful about the words we use and the meaning the hold:

(1) DEPOSIT: Giving Tesla $1,000 in order to have the right to purchase a Tesla Model 3 automobile, sometime in the future, at some price, hopefully around $35,000 as initially stated. Tesla indicates the $1,000 deposit is fully refundable, and is fully applicable to the price of the vehicle when the deposit holder purchases it.

(2) SALE: The transfer of ownership of a Tesla Model 3 from Tesla Motors to the deposit holder.

As at this time, Tesla alleges they have in the neighborhood of 400,000 Model 3 deposit holders. The Model 3 is not yet in production, and therefore no units have been sold.

When the Model 3 is available for sale, we will see how many of those deposit holders are converted into actual sales. Just as Tesla stock is bid up by hordes of speculators who believe they'll be able to sell their stock at a huge profit, you can be sure that some of the deposit holders intend to flip their Model 3 at a profit (i.e., selling over list price) in what they believe will be a mass frenzy of Model 3 demand. We'll see how this plays out when Model 3s start selling.

Keep your eyes on eBay for new Model 3s for sale over list, and in the months leading up to the first delivery, people selling their $1000 Model 3 reservation position for many times that sum.

None of what you say, regarding speculators selling "$1,000 spots" on Ebay will turn out to be true. That argument doesn't hold for volume produced items. Though perhaps you know something we don't?

mre30: I believe the following:

- When the Model 3 first starts selling, it'll be a mere trickle of cars rolling off the line; not the pro-rated "500,000 per year" some people envision. If all goes well, it'll take several years to clear up that alleged 400,000 deposit backlog.

- Some speculators will leverage that trickle and the Model 3 hype by offering their reservation in the production line to an audience they believe is champing at the bit to get a Model 3 ASAP, and who are prepared to pay a premium to get one NOW rather than waiting 2 to 3 years.

- This scenario is only viable while the Model 3 hype lasts. If early reports of actual cars include shortcomings, defects, or a consumer let-down, and the hype bubble bursts, then you can expect some portion of those alleged 400,000 deposits to convert into refunds rather than eventual sales.


I'm hoping the best for the Model 3 and Tesla in general. At least on paper, the Model 3 has a compelling value proposition for an affordable EV. (Well, as compelling as today's technological limits allow.)

@TheSteve: the above comment about "people selling their $1000 Model 3 reservation position for many times that sum" proves that you know diddly about Tesla.

The basic fact that Model 3 deposits are NOT TRANSFERABLE seems to have escaped your critical thinking. The remaining of your comment therefore becomes pointless.

The same holds true for mre30 with his usual rants.

It's a 3 step process. Deposits > Firm Orders > Sales. It behooves Tesla to convert those deposits into Firm Orders (Backlog) that will become sales. Backlog one can take to the bank and borrow against.

Tesla's end game is not selling cars...it is proving the EV concept and then cashing in big time on their battery technology which within a few years will at least a generation ahead of anyone else. Tesla is not serious about long term manufacturing in a profitable way....if they were California would be the last place to do this, they needed a factory quick to get in front of the EV market and to prove the viability of EVs. They will probably keep making a few high end/high performance vehicles with their "next generation" of batteries while selling the current generation to other OEMs.

Can we please stop that theywillloosemoneyoneverycartheysell-nonsense.

Just because GM cannot make a decent car for 37500,- does not mean nobody can.

No - we won't stop mentioning the - they never made a profit - UNTIL THEY ACTUALLY do make a profit. THe longer it takes for the Model 3 to be delivered - the more competition will be in the market place - putting pressure on prices and profits. GM can afford to lose some money on the car to gain the MPG advantages - Tesla has no such luck - so PROFIT is the name of the game - and so far - TESLA has not shown that it can make a profit at $80,000 a car.

And by the way - General Motors does make MANY decent cars for less than $37,500 - AND they make a profit doing so as well.

They have more preorders than any other car in history, it's pretty obvious they are going to sell a crapton barring some sort of catastrophe. So far the release candidates look solid.

Model 3 will cannibalize sales from used Model S, but not a new one.