News from Tesla; Preparing for the Model 3

06.18.16 - Tesla Model 3

Would it surprise you to see aggressive actions from Tesla? It shouldn’t surprise you at all as this is the company that was so bold as to bring us the Model S which has no gasoline powered engine at all. They have continually stated they will develop the new technologies and be the first to the market with some and offer us the example of their semi-autonomous driving system on the Model S as a great example. Their latest venture, the Model X seems to be fraught with issues and defects, but still the have a huge following.

As Tesla prepares for their third production vehicle, the Model 3, which is meant to be an affordable EV for all to enjoy, there has been some movement in their process which shows us they are serious about making some of the lofty goals set forth. So far Elon Musk, CEO of Tesla, has stated the company will begin producing 500,000 units per year by the end of 2018 and will begin delivery of the Model 3 by the end of 2017. These two goals seem out of reach considering the production problems already facing Tesla.

First is the production problem, Tesla has yet to break through and produce even 100,000 models in a year but seems certain it can deliver somewhere between 80,000 and 90,000 this year. The Tesla plant had enough difficulties bringing in a second model production line and now it needs to be able to have a third, and one that will be the busiest of all three. In a move to make this possible, which would require a great deal of capital, there has been a registered public offering of Tesla stock which is said to be worth $2 billion.

Of this $2 billion, $1.4 billion will go into the production of the Tesla 3 line and the rest will be used to cover tax obligation and to charity. This amount of capital at this time could be the boost Tesla needs to get their plant ready for the Model 3 and be able to provide this new model to the masses. As of now there is said to be about 400,000 preorders for the Model 3, but it seems there may be a bit of confidence waning. In order to report properly for the stock offering Tesla had to calculate the actual number of order which comes in around 373,000 with 8,000 that were cancelled and 4,200 that were duplicates in the system.

It may be a serious surprise that Tesla has so many preorders, or you may be more shocked to find that only 8,000 people cancelled their initial order of this car. While we wait and see if Tesla can deliver on time for this car confidence seems to be swinging back and forth as we remember the eighteen month delay for the Model X, but also see the aggressive strategy put forth by Tesla to have this third model up and running.

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