By on May 19, 2016

Tesla Model 3

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.

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53 Comments on “Tesla Confirms Model 3 Order Cancellations; Musk Goes Looking for Cash...”


  • avatar
    laserwizard

    Well, duh. Who would have thunk that the idiots who would buy a Tesla in the first place would actually buy one. This whole event was a staged one predicated on grabbing cash for the ponzi scheme. And no self-respecting (is there such a thing) environazi snob would pass up having their name on the pre-purchase list. And when no one was noticing, they’d cancel. And 90% of the clowns will cancel. Probably after posting a selfie of them and their reservation screen.

    • 0 avatar
      mcs

      Why would you be an idiot to buy a Tesla?

    • 0 avatar
      healthy skeptic

      @Laserwizard

      If a couple of years from now you’re proven wrong, and Tesla mostly delivers on its promises, will you come back to TTAC and say “I was wrong”?

      Just askin’.

    • 0 avatar
      Luke42

      I’m one of the 93% of Tesla Model 3 reservation holders who hasn’t canceled.

      I’m not an idiot.

      I am knowingly entering in to a deal which might not work out. I know that I signed up to buy a car that wasn’t completely designed when I put down my $1000 deposit on 3/31. I know that Tesla hasn’t released a car on time yet. I know that Tesla doesn’t make perfect cars.

      But I’m not an idiot. But I am I *am* knowingly taking a risk, because I like the car and the generational change that the technology under its floor represents.

    • 0 avatar
      sgeffe

      Not to make fun of the Tesla fans among the B&B (since if Musk can pull off the 3, it’ll be a game-changer), but rather to wonder, based on the particular starter of this thread and their “labeling” of vehicles:

      “Is there such a thing as a ‘Tesla-duh’?”

    • 0 avatar
      orenwolf

      I still have a reservation. I have no intention of cancelling at this time.

      Feel free to call me an idiot, though I fear there may be a little self-reflection there.

    • 0 avatar
      tekdemon

      Oh noes, we must be idiots because we’re risking $1000 whole refundable dollars on a Model 3 reservation whereas the laser WIZARD is super smaaaht and would never do such a silly thing. It’s definitely dumb to risk $1000 entire dollars in order to make it infinitely more likely that you’d qualify for the $7500 tax credit for a car you want that’ll likely out-accelerate every single other vehicle in it’s size class at launch. Did you consider that maybe some of us can actually take calculated risks because we have jobs or businesses that let us actually buy new cars and that even if the worst case scenario occurs where Tesla magically disappears off the planet we wouldn’t be crying in the corner like you apparently would?

      Maybe some of us enjoy supporting a brand new American car company that’s actually seen as innovative and exciting across the world. A company that’s selling more Model S’s than S Classes, A8’s, 7 series and LS’s combined even though it wasn’t even founded until the 2000s. One that bought up the remains of the old NUMMI factory after GM imploded itself and is actually bringing auto manufacturing jobs back there. Or maybe some of us just want a car that accelerates really, really, quickly before anybody else.

      Seriously, with the ridiculous EV bashing posts you endlessly post here it’s starting to sound like you’re a Venezuelan oil czar who wants to make all EVs sound like they’re the work of the devil. Ridiculous.

  • avatar
    seth1065

    Not really surprised 8,000 folks backed out, maybe it was cool to say at the local bar “yeah I just put my deposit down on the new Tesla” I do not see Elon hitting the target and I expect more will drop out when they realize the tax credit will be gone before they get theirs depending where they are on the list. I hope he succeeds we need more choices. I still think he will sell out to some other bigger auto company.

  • avatar
    seth1065

    WTF Goldman we think they will miss the mark by 66% but we want the cash grab on the stock offering so we will put a “buy ” on the stock and folks wonder why most folks hate wall street.

    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.

    • 0 avatar
      heavy handle

      The implication is that the 2018 date isn’t all that critical to their long-term success.
      The car could be months late (like all previous Teslas), or slow to ramp-up, without affecting the stock’s long-term growth potential.

      That’s Goldman’s opinion anyway. There are lots of other opinions out there.

      • 0 avatar
        Russycle

        Of course. Tesla’s not going to turn into a pumpkin at the stroke of 12 on January 1, 2019 if they don’t hit their numbers. Musk set an ambitious, and arbitrary deadline. Probably won’t hit it, but it will keep the press talking about Tesla for next 2+ years and motivate employees to work efficiently without getting bogged down. His punishment for missing the date will be a slight hit to the stock price, a few disgruntled potential customers tired of waiting, and much gnashing of teeth by the haters who hate Tesla anyways.

      • 0 avatar
        TrailerTrash

        Well…not exactly.
        The date IS critical but Goldmans has some skin in the game.
        Are you aware of their part of the scam?
        And this whole announcement for stock and Goldman’s report all seem rather stinky.
        There should be tighter watch on these banks and their ties to investment research, company stock buy/ownership.

        And gain, I don’t give a whip about their success. I DO care about having taxpayer money on the hood of the rich greenie jewelry. I don’t care if they suddenly came out with a Honda Jet that halved the fuel use…I just don’t want any of my money used to increase the odds of sales success.

  • avatar
    jkross22

    The Model S looks cool, but this is an egg.

  • avatar
    JimZ

    interesting to see the differences in tone between this piece and the one on Jalopnik.

  • avatar
    CoreyDL

    Good grief how are their share values so high? Propped up by buzz?

    • 0 avatar
      WheelMcCoy

      Goldman Sachs recently upgraded their recommendation to a buy. They see a target price of about $250. But it may be in self-interest because they have a deal with Tesla to do the secondary stock offering.

      I just saw @seth1025 pretty much noted the same thing.

    • 0 avatar

      Investors have been treating it as a high tech stock instead of a car stock. That pretty much means it’s highly overvalued.

    • 0 avatar
      Luke42

      Buzz, and the hopes of sci-fi reading geeks everywhere.

      Its the future, dammit! If I can’t have a flying car, an electric car which looks like a Porsche mated with a space ship will do just fine. :-)

  • avatar

    I am surprised that it’s legal to take deposits on a product that doesn’t yet exist and if it did exist you couldn’t currently afford to build. It is legal isn’t it? I mean, it must be since it’s already done. Kevin Trudeau made millions doing that.

    • 0 avatar
      WheelMcCoy

      That question came up in an earlier TTAC article — yes it’s legal. Some of the B&b found a disclaimer on the Tesla page.

      I wished Musk stopped taking pre-orders at, say, 200,000, and told people if they wanted to support Tesla, buy $1000 worth of stock (about 4 shares) instead.

      But he kept the feeding frenzy going and now there’s a hang over. With the Model S, he had the luxury of time because it was an expensive and relatively limited production run. Now he has to mass produce the Model 3 and that puts a lot of pressure on the company. I think he was able to reset expectations though. And if he delivers a top-notch product, even though late and more expensive than originally planned, history shows that he will be forgiven.

    • 0 avatar
      JimZ

      if that was the case, Kickstarter would be illegal.

      • 0 avatar
        Luke42

        Ir really is like kickstarter for a car.

        Kickstarter works best when there’s a sizable Intwrne community out there that really wants your product. That seems to be the case with serious efforts at electric transportation.

        Not everybody wants one, but those of us who do are willing to out our money where our mouth is.

    • 0 avatar
      orenwolf

      That’s the entirety of Kickstarter/Indiegogo there. And while there’s been a few scams for sure, they’ve also made many new products (some million-dollar ones at that). I have a few results (some from multi-million dollar kickstarter campaigns) in my home now, in fact.

      Certainly never been done at this scale before, and clearly the reservations are not intended to pay for the development, unlike most KS campaigns.

  • avatar
    redmondjp

    There is nothing new here that convinces me that this is going to end well – but trying to spend $2B before the end of the year – that is pretty audacious and I’d like to see how that is even possible. I work on projects 1 – 2 orders of magnitude smaller, cost-wise, and we struggle to get the money spent in twice as long – big capital projects take a long time to complete!

    Good thing that we have all of these Bernanke/Yellenbucks still helicoptering down . . .

  • avatar
    bunkie

    “…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…”

    By my math, that represents about a 1.09% error rate (the erased duplicate orders) and a 2.08% cancellation rate. Those are pretty respectable numbers for any advance order items and *especially* for one as expensive as a car.

    The horror!!!!

    • 0 avatar
      VoGo

      Finally, a sane response.

      • 0 avatar
        mcs

        I suspect that most people that put the $1,000 done know what they’re getting into and will be tolerant of any delays. If someone like Nissan puts together a car close in specifications to the 3, then you might lose a few people. Otherwise, I think they’ll stick with their orders.

        • 0 avatar
          krhodes1

          I am not so confident of that. I know a couple folks who put down deposits who had NO IDEA that the tax credits are due to sunset, highly likely before they get their cars here on the east coast. That represents a very substantial price increase.

          I wouldn’t expect many cancellations now, but as time marches on? Who knows!

          As I have said before, I wish Tesla luck, they are going to need it. My biggest concern is not how they are going to build that many cars, but how they are going to sell, deliver, and service that many cars.

          • 0 avatar
            VoGo

            Krhodes1,
            You’ve written something really interesting. First, all the ‘experts’ said that Tesla could never convince hundreds of thousands of consumers to go electric with them.
            Then, the ‘experts’ said that Tesla could never build that many cars.
            Now, the ‘experts’ are saying that Tesla can’t sell, deliver and service so many cars.

            The paradigm has shifted.

        • 0 avatar
          Luke42

          “I suspect that most people that put the $1,000 done know what they’re getting into and will be tolerant of any delays.”

          I’m a Model 3 reservation holder, and I resemble that remark.

          “If someone like Nissan puts together a car close in specifications to the 3, then you might lose a few people. Otherwise, I think they’ll stick with their orders.”

          Don’t forget that the Chevy Bolt is (supposedly) coming out this fall. It will have a 200 mile range and a 6-second 0-60. It looks nice on the inside, and looks like a penalty box on the outside.

          I haven’t ruled out purchasing both cars. My wife just started a job with a 50-mile each way commute, and we have real winter here. So a Bolt with an advertisef 200-mile range would be a nice fit for that commute, and it’s likely to be available at year or before my Model 3 will be delivered. Removing the gasoline from that 25k-mile per year commute ASAP seems like a win. If I buy her a Bolt, I might be able to keep the Model 3 for myself. :-D

          • 0 avatar
            sgeffe

            ^ This.

            I’d be very leery of wintertime range-anxiety with even a twenty-mile one-way commute if I couldn’t plug-in at work. (Or, Lord knows I would just happen to find a bar with cheap Great Lakes Brewing Company Edmund Fitzgerald on tap, right across from a Supercharger; I might not much CARE about getting home at that point! Of course, there is the matter of the next day…! ;-) )

          • 0 avatar
            krhodes1

            @Luke42

            The Bolt looks like a CUV. You know, the fastest growing, hottest segment of the car market? I don’t like the stupid things either, but I fail to see how that makes them look like a penalty box.

    • 0 avatar
      WheelMcCoy

      You just had to bring math into it, didn’t you?! :)

      The nerve!!!!

    • 0 avatar

      If only those that had written this article had taken such an unbiased and factual approach.

    • 0 avatar
      rpn453

      You just changed the absolute numbers to percentages to make them look smaller. But really, 2.08% of the world population is 150 million, and 2.08% of the U.S. GDP is $375 billion. Is 150 million people an insignificant amount? What about 375 billion dollars? Does that sound insignificant to you? We’re talking big numbers here. Don’t try to confuse us.

      • 0 avatar
        WheelMcCoy

        @bunkie was just pointing out that *statistically*, the numbers are in line… better even.

        Yes, a GDP of $375 billion is a large number. But there’s also a margin of error in it’s calculation. I don’t know what it is, but if it’s off by 2%, that’s pretty good. If it’s off by, say 10%, well, then the economists better go back and revise the numbers.

        Tesla’s pre-order error rate of 1% and a cancellation rate of 2% ain’t bad.

        • 0 avatar
          VoGo

          Something tells me that Chevy would love to see 8,000 pre-orders for the Volt.

          I’m not sure what % of 375 billion that is, but then it isn’t in any way relevant.

  • avatar
    DeadWeight

    Tesla won’t hit anywhere near 200,000 deliveries of any Model 3 priced remotely within $35,000 even by the middle of 2018, and most likely, not even by the end of 2018 (that’s 19 months from now and far less than half of Tesla’s alleged projections for builds and deliveries).

    And for every Model 3 built and delivered, Tesla will suffer a higher loss as a % of transactionprice than with the Model S or X.

    In other words, the closer that Tesla is able to match its production, delivery and price targets, the more money it will lose, faster.

    • 0 avatar
      healthy skeptic

      @DW

      >> not even by the end of 2018 (that’s 19 months from now….)

      Think you meant 2017.

    • 0 avatar
      orenwolf

      I appreciate your comment. I suppose we’ll see if you’re right, and Tesla can’t deliver 200k Model 3’s by 2018. I personally wouldn’t take that bet, though.

      I will happily discuss the results in 2018 with you, however. :D

  • avatar
    indi500fan

    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.

  • avatar
    Pch101

    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.

  • avatar
    Conslaw

    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.

  • avatar
    SCE to AUX

    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.

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