Initially, Tesla Motors CEO Elon Musk said that the $35,000 version of the Model 3 vehicle will be available until 2018. Consumers have been clamoring for the opportunity to drive an all-electric sedan at a low cost. And right out of the gate, the Model 3 has been receiving mostly positive reviews.
One of the challenges in building the Model 3 is that it requires high-end manufacturing at a low cost — which is causing production delays and inconsistent quality. The goal of building Model 3 with a price of $35,000 is putting immense pressure on Tesla. And selling a Model 3 at a price of $35,000 could prove that Tesla Motors is capable of switching from an exclusive luxury automotive company to a ubiquitous brand.
Tesla Motors was able to manufacture 5,000 Model 3 vehicles a week back in June. But Tesla only made the premium version of the Model 3 with longer range batteries. As of right now, the $49,000 version the Model 3 is available for order.
According to Business Insider, Musk indicated that the company would start distributing the $35,000 version of the Model 3 about three to six months after it reached the 5,000 vehicle production goal. This would indicate that deliveries of the $35,000 version should have started happening between September and the end of December. But then Musk pushed this timeline to June and mass production would begin in 2019.
Tesla’s website also says that the $35,000 version will not be available for another four to seven months. Kelley Blue Book executive analyst Akshay Anand and Edmunds industry analysis manager Jeremy Acevedo said that the timeline that is listed on Tesla’s website is the most realistic.
Anand and Acevedo said it would not likely be possible for Tesla to start deliveries of the $35,000 Model 3 until September. And they said it as more likely to start in 2019.
This can be a big problem for interested consumers because they could lose access to a $7,500 tax credit for their vehicle, which is set to expire in January. At that point, the credit gets dropped in half.
Demand for the Model 3 is extremely high as well. In a regulatory filing, Tesla said that it has around 420,000 net reservations of the Model 3 as of the end of June. So the company stopped taking reservations. However, some customers may end up canceling their orders due to the long wait times and the drop in tax credits.
Acevedo also believes Tesla Motors is focusing less on the $35,000 version of the Model 3 due to profitability reasons. In a second-quarter earnings letter, Tesla said it is aiming to hit consistent profits starting the third quarter. And the higher-end version of the Model 3 will help the company achieve that goal. According to UBS estimates, the $35,000 Model 3 would actually be a $5,900 loss per vehicle.
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