Tesla Confirms Model 3 Order Cancellations; Musk Goes Looking for Cash
It’s billed as the affordable electric car of the future, but 12,200 reservations have dropped off the Tesla order list since the company’s Model 3 came on the scene.
The new tally was revealed when Tesla announced plans to raise $1.4 billion through a share offering to boost its financial standing, Bloomberg reports.
Since orders opened, 4,200 duplicate reservations have been erased by the company, and 8,000 customers have backed out of their purchase. That leaves 373,000 reservations on the books, each backed by a $1,000 check.
To get the $35,000 Model 3 into production late next year, Tesla founder and CEO Elon Musk needs cash — a lot of it. Musk plans to spend $2 billion before the end of the year to finalize Model 3 plans, increase capacity at its Fremont, California assembly plant, and to get batteries flowing out of its Nevada Gigafactory.
Reuters reports that Musk will sell 8.2 million shares at a price of $204.66 per share.
The timeline is tight. Tesla wants to have 100,000 to 200,000 Model 3s out the door by the end of 2017, and have overall production hit 500,000 units per year by 2018. Any delays to that timeline and customers could shy away from purchasing or back out of reservations.
Critics of the timeline are many, and growing. Goldman Sachs issued a report yesterday claiming Tesla will miss its 2018 production target by 66 percent, but still recommends buying the company’s stock.
News of the stock sale didn’t help Tesla’s share values. They fell by just over one percent after news of Musk’s plan broke.
This is awesome. I can see myself buying one in 2023 with 20,000 miles for 10 grand. Maybe another one for my grandson who would be a senior in hs. We can take them to Lucas Oil Raceway and race each other at the Wed night street drags.
The headline is misleading. The cancellation of some pre-orders, which is to be expected, is not a factor in the need to raise cash.
First of all, it is easy to raise a couple billion dollars in the stock market when you have customers putting down a third of a billion dollars on products that they want to collectively pay $30 billion for and know they won't take delivery on for two years or more. That's a lot better demand forecast than investors generally get, and that's how equity markets SHOULD work. Secondly: why should people be mocked for desiring a $50,00 vehicle which pushes the state of the automotive art and maybe, just maybe will point the way to a lifestyle less dependent on fossil fuels and less destructive to our climate. MEANWHILE, millions of people each year buy $50,000 pickup trucks and SUVs and drive those vehicles alone to and from their sedentary jobs. The people buying the Model S and the model 3 know that they face extra costs and some glitches for being early adopters, but they figure driving a Tesla is interesting plus it pushes technology in a good direction.
I'm predicting a pre-order peak of 444k at the end of 2016, with a decline to 421k by the time production allegedly begins in mid-Q4 2017. I'll cancel if the actual price goes up too much. You know, some people cancel simply because their financial situation changes.