Tesla Answers Your Model 3 Questions Before You Ask

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In attempt to get ahead of the thousands of inevitably repeat questions current and potential Tesla Model 3 reservation holders will ask, Tesla went ahead and posted a FAQ sheet for Model 3 reservations. While it doesn’t reveal much that we didn’t know already, it sheds light on a few key points that are worth highlighting.

Tax Incentive

Tesla is well aware of the importance of the US EV Federal Tax Incentive. Elon unofficially confirmed that Tesla would take actions to maximize the benefit buyers get from the tax rebate in his Twitterfest earlier this week, but now it’s documented, in the name of the company. Tesla is aware of just how big of a deal the rebate is and will make efforts to inform buyers as to their relative eligibility.

There will be an awkward tail-off of the federal rebate after Tesla sells its 200,000th vehicle in the US (because they’re all EVs). That triggers a decrease in the rebate for buyers. Some buyers may be banking on the $7500 federal rebate to get the car to fit into their budgets, so this is a point worth noting. Either way, state rebates still apply, with some ranging as high as $6,000… like in Colorado.

Test Drives

Tesla also wanted to nip any test drive questions and rumors in the bud, sharing that Model 3 test drives would not be available until the same “late 2017” as the start of production. This is a bummer but not an unexpected one. Just think what Model 3 reservations would spike up to if we had a few dozen of them sprinkled around to let folks cruise around in… but yeah, with several hundred thousand reservations already queued up, that’s probably not worth focusing on right now. A guy can still dream, right?


Start of Shipments

While the start of production is supposed to be kicking in sometime in late 2017, we really have no idea when the start of shipments will be. Tesla confirmed again in the FAQs the timing we already had visibility of, with no additional details provided. Bummer.

Reservation Cancellations

Tesla is building in the ability to cancel a reservation into the MyTesla page. It doesn’t sound like they are expecting lots of cancellations, but rather, want to reassure all the people who put $1000 of their hard-earned money into the Tesla machine that they can get it back out again if they’re having second thoughts.

Also, automating the process keeps the effort Tesla needs to expend supporting cancellations to a minimum, so all the good people at Tesla can work on important stuff like scaling up the factory for Model 3 production, building the Gigafactory up from the current 14% capacity to full production, and going out to pick up macaroons for people waiting in line. Maybe not that last one, but you get my point.


Check out the full rundown of answers that you might have questions about over at the Tesla Model 3 reservation Q&A.

Images by Kyle Field

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I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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39 thoughts on “Tesla Answers Your Model 3 Questions Before You Ask

  • For the new countries like Ireland that they’re coming into it would be good to have clarity on where exactly the Super Chargers will be, ahead of finalising the order. If it was on the south of Dublin great, northside, not so great.

    • Just name an intersection. (-:

    • Key thing to keep in mind for superchargers is that they are intended to support long distance travel so the placement might not be ideal for day to day use.

      • Thanks. For some reason when I go to that URL I’m redirected to the Mexican version of the site with everything in Spanish.

        • LOL. Thats a good one. Good lord. Maybe it has something to do with location tracking. You think it somehow misreads your location or something? Go straight into teslas site and you can get it.

          • I have the indignity of being in “Other Europe” for a while longer.
            Found this Reddit map of planned Supercharger stations in Europe by the end of 2016.

        • Try Supercharge.info. They have news on sites before they are typically announced and give timelines, permit status etc.

  • I think the Tax Incentives are an exaggerated issue, I personally think they maximize it and get an additional 150,000 through the window at least.
    I think about 1/3 – 2/3rds the reservations will follow through, making the vast majority receive the full incentive. Who knows, if there is strong enough demand the goverment may grant an extention to it sometime in the next year.

    • I agree. It seems like Tesla is thinking ahead to maximize the benefit for customers. It will be interesting to see if the rebates are extended…though at this point and with the price point of the Model 3, it shouldn’t have that much of an impact.

      • I’m on the opposite side of this. Tesla is taking the right approach and treating this tax credit like the gold it is. I think the full $7,500 tax credit will be a deal maker or deal breaker for a significant percentage of reservation holders. There’s a big difference between a $25K car, $35K car, and $45K car. These 3 price points span 3 different segments and I’m guessing at least 33% of reservation holders are in the $25K segment.
        At the $25K segment, this will be the base model 3 counting on the full $7500 credit + down payment
        At the $35K segment, this will be people that will option up or down depending on the tax credit they qualify for which directly translates into higher or lower profits for Tesla.
        At the $45K segment, the tax credit qualification is unlikely to affect their purchase decision.

        • I’m not sold on that idea. The BMW 3 series sells hundreds of thousands of units per year and that’s just a normal car. It’s a fantastic piece of machinery, don’t get me wrong but it doesn’t compare to the Model 3. Having said that, there are likely quite a few people who are willing and able to stretch to afford it.
          Take me. There’s no way I would have bought a 7 series or 5 series BMW but we were able to prioritize the Model S and it’s not an issue. It pulled us up into a higher class than we would have bought in otherwise because it’s a better car hands down. I know quite a few others who are in the same boat and would expect the same for Model 3.
          I agree that there are probably a handful of people who are banking on getting the tax credit but seeing as how it’s a global list, I have a hard time believing that 1/3 are from the US, can only afford the bare-bones model and can only afford it if they get a tax credit. I would pin that number around 2% max as the likelihood of even 10% of reservation holders getting the full credit is slim.
          The last factor for me is that we aren’t just looking at people in the 25/35/45 segments…but also the 55/65 and probably even 75 segments who didn’t want to settle for a base model S. This car is $35k cheaper than Model S which is a huge chunk of potential buyers to pick up. Assuming the car will only be bought by people below/at or just above the base price excludes a huge piece of the picture.

          • I hope you’re right about the percent of reservation holders dependent on the full tax credit. Even if it’s a low as 2%, the $7,500 will play into the amount of options purchased. As most car companies, they make high profits on the options. Whether lower reservation conversion or lower options per order, this becomes a risk mitigation concerning lost revenue opportunity. Why take a complacent position and incur the risk of leaving substantial revenue on the table. Without insight into Tesla’s schedule, operational constraints, projected working capital / burn rate, etc. it’s a little hard to speculate the downside(s) to ramping sooner, but I would certainly engage in investigating the mitigation of that revenue risk.
            As Musk is already responding with statements of pushing to achieve a faster ramp, it sounds like they already know what the answers are.

          • Battery prices should continue to drop well after the $35k Mod 3 rolls out onto the roads. That means that Tesla’s profit per car (GPM) will continue to grow over time.

          • I’m guessing it will be popular with buyers from the fully optioned out Corolla S with custom wheels, up the the mid range of the BMW 5 series, where it hands over duties to the Model S.

            And this, “yeah, with several hundred thousand reservations already queued up, that’s probably not worth focusing on right now,” is the part where you read my mind.

        • I’m wondering how many of the credits will be left. If each manufacturer gets 200,000 credits and Tesla has already sold 107,000 cars up through the end of 2015 and sell another 80,000 (est) cars in 2016, that only leaves ~13,000 credits at the beginning of 2017. Won’t all of the credits end up going to S and X buyers with little to nothing left for 3 buyers by the time the 3 is actually sold?

          • There’s a couple pieces to this puzzle to keep in mind.
            1) The 80K sales target for 2016 is worldwide sales. Same thing on the 107K sold to date, this is worldwide sales. For the purpose of the tax credit, the only numbers that matter are the ones sold in the U.S.A. It’s not a perfectly accurate tracking mechanism, but multiple the numbers by 0.5 (1/2) to get an idea of the US sales.
            2) The full $7,500 tax credit does not cut off once the 200,000th car is sold. When the 200,000th car is sold, the limit switches from a total number of cars sold to a time based limit. The full tax credit continues through the quarter when the 200,000th car is sold and then through the following quarter. There is no limit to the number of cars that will qualify for the full $7,500 during this time limit. For example, if Tesla sells it’s 200,000th USA car on Jan. 2nd, 2018, all cars sold through June 30th, 2018 will qualify for the full $7,500 tax credit.

            With the limit for full tax credit switching from a total count to a time period after the 200,000th USA car is sold, Tesla can develop a strategy to maximize the number of Model 3 cars that will qualify for the full tax credit.

          • What Rich said….

          • Then the credit drops down to 50% for two quarters and then down to 25% for the two quarters after that.

            I guess the point was to ask how many people will be affected by the full/lower/zero tax credit and whether they will pick fewer options or not buy the car at all.

          • That’s the multi-billion dollar question (literally).
            None of us will know or even be able to speculate until we learn more about Tesla’s Model 3 release strategy, time to market, proposed unit output, etc.
            We’ll find out when we get to the 3rd / 4th quarter of 2017. Until then, don’t let any of this sway your decision to keep the reservation or make your reservation. The money is fully refundable. IMO, It’s better to have a place in line now than wait a year to get in line.

          • My guess is that all 300k people with reservations (the US folks) will get the $7k federal subsidy. I suppose we could try to game out the numbers.

            Start with 200,000 – total US sales prior to 2018.

            Assume some mix of S, X and 3 starting in 2018. That should allow a guesstimation of when the 200k for US sales would be reached.

            Assume Tesla would adjust output so that 200k hits early in a quarter. Then add in two more quarters of sales.

            Could be that Tesla will clear the reservation list and sell a lot more Mod 3s before seeing the subsidy drop to $3,500.

          • Subtract out the cars that were sold outside the US. The subsidy applies to US purchases. And there’s some sort of ‘fine print’ that means the subsidy doesn’t die with the 200,000th EV the company sells in the US but lingers until the end of the quarter (?) and then fades out.

            That said, when Tesla started manufacturing the Mod S battery prices were assumed to be somewhere around $400/kWh. By October 2014 Tesla was paying Panasonic $180/kWh. There is a statement which I can’t confirm that the price has fallen to $150/kWh. GM will be paying LG Chem $145/kWh for their Bolt. When the Gigafactory is running P/T prices should be around $130/kWh and falling toward $100/kWh.

            Shorter version: battery prices are rapidly falling. If there aren’t enough buyers for the Mod 3 at $35k (no subsidy) then Tesla can cut the price and still make money.

          • Who knows, they might even run an add. Kind of pointless at the moment considering they are no where near being able to manufacture all of the cars people want to buy from them.

    • An extension will depend heavily on the results of the election.

      • But of course, it’s just speculation, but I could see the country supporting it with the right political mix.

    • They stagger sales anyway, by building for various regions then shipping in bulk. And they have responded to changing incentives overseas, it’s not hard to see them adapting planning and deliveries for the same in the home market.

  • I’ve got some questions.

    Battery – how many kWh?

    Supercharging – included in the base model or an add-on? Number of uses per year somehow limited or are all taxis going to be Teslas within five years?

    The $25k long range Tesla – when do you start talking about it/

    Gigafactory – when with the next GF be announced?

    Electric trucks – is Tesla going to build electric trucks with swappable batteries to haul lithium from the Nevada mine to the Gigafactory? Tesla could kickstart a new transportation transformation without actually having to get into the business. Just demonstrate the feasibility and offer to build the battery packs.

    • My guesses…50 kWh battery = 215 miles in base model. Add 75 kWh option = 300 mile range.

      Supercharging = all cars capable. $2k cost to be able to use it…possible pricing scheme instead of up front charge.

      $25k Tesla = 6 years out? I haven’t heard them talk this at all. Response from other automakers would be revolutionary if they put out a Prius fighter/killer.

      I expect GF 2 and Factory 2 (europe) to be announced in the next year. Unclear to me where GF2 would make the most sense though Eastern Europe seems logical for many reasons.

      Short term solutions aren’t worth working on imho. Tesla is all about building the best production ready product to catalyze change in the industry. It would be fun if they punted a set of blueprints and battery options to Via, Chevy or Toyota and just let them have it. Something along the lines of “Build this or we will in 5 years. Up to you.” Heh 😀

    • Tesla has to get much bigger before they can build a 25k car. They made 50k cars last year. The 500,000 per year they are talking about is 10x bigger. If they execute well, then the 3 and y along with the S and X may take up all of their capacity in Freemont. Now if you see a second car and gigafactory getting built, then something is coming. Tesla does plan ahead.

      If I were Tesla, I would take a good look around then. Their competiton might have started to move. So far, most of the time they have looked around, they kept wondering “where is everybody?”

      • If I were at Tesla, I would create a division like BMW’s mini to create cars at $25K and below.

        • I assume you mean later. Tesla got orders 6 and a half times the total number of cars they made last year at a time when they can’t even keep up with S and X. Oh, and if those cars have problems, that is what the media is going to be talking about. They have a huge task in front of them. That said, they have been improving quality while ramping. And this is also a new model. I do think they can do it though.

          • Perhaps. They made ~30K in 2014, but they were working diligently to make ~50K in 2015. During 2015 they were working diligently to make ~80K in 2016. Tesla cannot expect to ramp up tomorrow, if they do not lay the groundwork today. The auto business is a long lead enterprise.

          • My guess is that Tesla employees purchasing Model 3s will do the early production testing –beginning with factory personnel.

          • I hope not. An abbreviated testing program could be a tragedy in the making. Or not. Would be a shame to leave it up to luck…and Murphy’s law.

          • First buyers are the beta market. By selling to its own workers first you get a set of beta testers who are going to be motivated to report problems and who live really close to the factory so that problems can be sorted out quickly.

            It probably doesn’t hurt that the beta testers will not include the dedicated sour grapes crowd.

          • That has always been true of Tesla. However the scale of the Model 3 launch will require much more time and testing than prior models. Although the Model S was not allotted sufficient time and scale of testing either. I just hope that that is effectively accomplished for the Model 3.

          • Tesla insiders have always done beta testing. And it has always been presented as the initial customer launch. That made sense with the Roadster when they needed to show immediate progress in the face of extreme skepticism. However, hopefully the process will see an extreme and entirely appropriate update.

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