Tesla May Be Burning Through Model 3 Orders Faster Than Expected

&l;p&g;On Thursday, March 31, 2016, Tesla started taking Model 3 orders. There were long lines at the Tesla showrooms which made it look like an Apple iPhone launch. Elon Musk tweeted that there had been 180,000 orders in the first 24 hours and by the following Thursday, &l;a href=&q;https://www.teslamotors.com/blog/the-week-electric-vehicles-went-mainstream&q; target=&q;_blank&q;&g;Tesla announced&l;/a&g; that it had received over 325,000 Model 3 reservations.

&l;img class=&q;dam-image getty size-large wp-image-518417922&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/518417922/960×0.jpg?fit=scale&q; data-height=&q;638&q; data-width=&q;960&q;&g; Tesla fans stand in long lines at Park Meadows March 31, 2016 to preorder the new Tesla. Photo By John Leyba/The Denver Post via Getty Images

Tesla first started delivering Model 3&a;rsquo;s to employees and then existing Model S and X customers. The first ones were in July last year, and in the September quarter the company sold 222 vehicles. This increased to 1,550 in the December quarter, which continued to be to current Tesla owners. For the March quarter &l;a href=&q;http://www.forbes.com/sites/chuckjones/2018/03/21/teslas-model-s-and-x-deliveries-could-be-slip-sliding-away/&q;&g;delivery estimates range from 7,000 upwards to about 15,000&l;/a&g;.

Starting around January 23 &l;a href=&q;https://electrek.co/2018/01/25/tesla-model-3-available-reservation-holders-check-your-account/&q; target=&q;_blank&q;&g;Tesla owners, who had not ordered on the first day&l;/a&g;, could start configuring their Model 3s. After a month passed (February 22) non-Tesla owners could start to &l;a href=&q;https://teslamotorsclub.com/blog/2018/02/22/model-3-invites-extended-to-non-owners/&q; target=&q;_blank&q;&g;configure their Model 3&a;rsquo;s&l;/a&g;, which was two weeks after the &l;a href=&q;http://www.forbes.com/sites/chuckjones/2018/02/09/there-seems-to-be-a-disconnect-between-teslas-production-goals-and-model-3-delivery-dates/&q;&g;Standard Battery Model 3 configuration had slipped out to late 2018 or early 2019&l;/a&g;. To balance out what appeared to be a schedule slippage for the Standard Battery version, the Dual Motor is now available in May and Canadian orders opened up yesterday.

&l;img class=&q;dam-image getty size-large wp-image-910879230&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/910879230/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Tesla&s;s new Model 3 car on display at the Tesla store in Washington, D.C. Photo by Salwan Georges/The Washington Post via Getty Images

&l;strong&g;Moving quickly through the initial orders&l;/strong&g;

How quickly Tesla moves through orders from people who did now own a Model S or X will be critical in determining how solid the Model 3 backlog is. As I wrote above, Tesla received 180,000 Model 3 orders in the first 24 hours. Most of those would be on March 31, so lets assume 150,00 were on the first day.

In checking &l;a href=&q;https://model3ownersclub.com/threads/the-official-%E2%80%98invite-delivery-status%E2%80%99-thread.5312/page-150&q; target=&q;_blank&q;&g;model3ownersclub.com&l;/a&g; it appears that multiple people who were at least the 100&l;sup&g;th&l;/sup&g; person in line on March 31, 2016, are receiving invitations to configure and take delivery of their Model 3. The line I was in at the Stanford Shopping Center in Palo Alto, California, probably had at least 300 people lined-up and may have had 500 or more show up the first day. In theory all of them should be able to configure their Model 3 before the next day&a;rsquo;s customers could buy one.&a;nbsp;An email from Tesla arrived this morning inviting me to design my Model 3, with delivery in 3 to 6 weeks.

&l;img class=&q;size-full wp-image-11718&q; src=&q;http://blogs-images.forbes.com/chuckjones/files/2018/03/TESLA-MY-MODEL-3-ORDER-STATUS-3-TO-6-WEEKS.jpg?width=960&q; alt=&q;Tesla Model 3 order form&q; data-height=&q;471&q; data-width=&q;770&q;&g; Tesla Model 3 order formw2


&l;strong&g;April 1 and later orders may be opening up&l;/strong&g;

&l;p class=&q;tweet_line&q;&g;Therefore, the next critical order group are the ones that were not on the first day . Again on the model3ownersclub.com website, on page 151, there is someone who is a non-Tesla owner and ordered his on April 1 who has been invited to configure his Model 3. He has also posted that someone he knows that ordered a week after him just received an invitation to configure his.

&l;strong&g;What does this mean?&l;/strong&g;

If Tesla has worked through at least the 150,000 or so first day orders for non-Tesla owners in just a month, the conversion rate of the initial orders may be lower than expected. I am assuming that most of the orders were from non-Tesla owners since Tesla Model S and X owners did not need to order on the first day to get priority.

Or it may be that customers are deciding to defer their orders so that they &l;a href=&q;http://www.forbes.com/sites/chuckjones/2018/02/09/there-seems-to-be-a-disconnect-between-teslas-production-goals-and-model-3-delivery-dates/&q;&g;don&a;rsquo;t have to pay for options that are being sold&l;/a&g; in the initial batch of cars.

Or they did not anticipate getting them so soon and need to dispose of another car before they buy the Model 3.

Or they may be waiting for a lease option.

Or they may actually want to test drive one.

&l;p class=&q;tweet_line&q;&g;It could be too early to tell what the yield will be from the backlog, but it is worth monitoring since Tesla has committed billions of dollars in capital and accelerated its production schedule to meet a very high level of Model 3 demand.

If you want to understand Elon Musk&a;rsquo;s new stock award plan and how it compares to Tim Cook&a;rsquo;s, check out my article&l;strong&g;, &a;ldquo;&l;/strong&g;&l;a href=&q;http://www.forbes.com/sites/chuckjones/2018/03/23/how-elon-musks-stock-award-compares-to-tim-cooks/&q;&g;How Elon Musk&a;rsquo;s Stock Award Compares To Tim Cook&a;rsquo;s&l;/a&g;&a;rdquo;.&l;/p&g;

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