Tesla’s Model 3 is still about 18 months from production, but the Silicon Valley automaker has already lined up an enviable order book, the ever-ebullient CEO Elon Musk declaring it, “the biggest one-week launch of any product ever.”
But there have been some questions raised about Tesla’s claims. For one thing, potential buyers have been plunking down $1,000 refundable reservations, not orders. They’ve still got plenty of time to decide if they actually will purchase one of the compact battery-electric vehicles once they finally begin rolling off Tesla’s Fremont, California assembly line.
And are consumers really the ones making these reservations? Or are speculators and others who really have no intention of ever taking delivery of a Model 3 inflating the list?
The possibility of an inflated reservation bank has been generating some buzz online. Tesla certainly has benefitted from the initial response to the Model 3, which was unveiled at a well-attended ceremony in Fremont on March 31st. The maker’s stock, which had been losing momentum, did a rapid about face – though it’s been settling back in recent weeks.
While no one appears to be pointing a finger at Tesla, claiming they’re hyping the numbers to stoke enthusiasm, there has been concern that speculators have been jumping in and placing orders, hoping to get Model 3s as early as possible while Tesla slowly ramps up production.
Anton Wahlman, a former sell-side analyst with UBS, and now a contributor to website Seeking Alpha, wrote that he went online and quickly placed order for 20 cars. After Wahlman posted about his move, Yahoo! Finance tried the same thing and was able to put four cars on its corporate credit card.
The problem is that Tesla has claimed it is limiting orders to a maximum two per person – which could be a problem for a green-minded household with a couple of kids, of course.
So, how many of the 325,000 reservations Tesla claimed to have taken that first week – with 400,000 total orders a month in — might have come from speculators? How badly is the list inflated?
As skeptics began tweeting and posting about the multiple orders, CEO Musk naturally weighed in. In one tweet, Musk declared, “Duplicates will be cancelled. Max of 2 will be delivered to any one person. Only ~5% of orders are 2, so speculation unlikely.”
In a subsequent tweet, Musk added that Tesla’s scan of the reservation bank found only 0.2% had the same e-mail and physical address, adding that, “Those have been purged.”
(Tesla claims it has developed a bio-defense mode for its battery-cars. Click Here for the story.)
Tesla has to be pleased that the number isn’t larger and that it doesn’t have to refund more money. The $1,000 reservation essentially serves as a no-cost loan for the battery-carmaker, helping avert a cash crunch as it continues to invest heavily in the final development of the Model 3. That cash shortfall was one of the reasons why Tesla’s stock was losing momentum in the months leading up to the small car’s debut.
There are still plenty of questions about the Tesla Model 3, however. The company was about two years late to market with the Model X battery SUV, and it has been facing a number of quality and reliability issues which led normally Tesla-friendly Consumer Reports to raise a red flag last month.
(Tesla hammered by Consumer Reports over quality woes. Click Here to hear why.)
The challenge will be to not only bring the Model 3 out on time, sometime late in 2017, but also to ensure that it delivers the sort of quality so far lacking from Tesla’s Models S and X.
The other challenge will be convincing those who’ve placed reservations to stay in line – especially if the Model 3 does come out later than promised. Chevrolet will bring out the new Bolt, offering a similar price tag and range, later this year. And Ford, Volkswagen, Nissan, Audi and other makers are expected to come out with longer-range, more mainstream offerings of their own in the near future.
At some point, Tesla may have wished it took all the reservations possible, whether singular or multiple.
(Ford planning long-range EV to challenge Tesla, GM. For more, Click Here.)