Why Telsa Will Likely See 100k Model 3 Reservations Within the First 24 Hours

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With all the buzz surrounding the upcoming Model 3 unveil and how Tesla will likely book 100,000 reservations within the first 24 hours of reservation opening, we decided to do a little math of our own to see what that may mean given some basic assumptions. We know that there are 221 Tesla stores worldwide that will begin taking Model 3 reservation at 10 am local time. Of those stores, there’s a high probability – based on feedback from staff at Tesla stores regarding the volume of inquiries around the Model 3 March 31st in-store reservation process – that hundreds of people will already be lined up, many of which camped overnight to guarantee their early spot in line, before the store opens. It’s important to note that we are assuming 24 hours from a 10am Pacific time opening and not 10am from the Sydney Australia Tesla Store which is 18 hours ahead.

Assuming each of the 221 Tesla stores can process  a very conservative 30 reservations per hour, though some stores are preparing to handle 50 reservations or more per hour for the duration of the store’s opening hours, we can project a low of  53,000 Model 3 reservations will be placed before store closing on March 31st. These are from people that physically lined up at stores to place their reservations.

Tesla will also be opening up reservations online that same day when the Model 3 unveiling event begins at 8:30pm Pacific time. We also make the assumption that a large majority of existing Tesla owners, who have been given priority on receiving a Model 3 over non-owners, will place their reservations online that evening. Considering a very modest 25% of the existing 100k Tesla owners place deposits on a Model 3, we’re reaching a total of nearly 80k reservations when factoring in in-store deposits.

There’s also the likelihood that a significant percentage of Tesla employees – many of which have already placed their reservations – along with thousands of Model 3 enthusiasts that decided to forego the Tesla store frenzy, will reserve online the minute Tesla makes it available the evening of the 31st. Then there’s the impulse buyers who have heard about Model 3 mania through social media, Engadget, Bloomberg, Fortune, and mainstream media outlets for weeks leading up to the event, and decide to plunk down the $1,000 Model 3 reservation deposit. After all, it’s refundable by Tesla so why not?

With those assumption in mind, the reservation number can climb quickly and easily surpass 100,000 Model 3 reservations within the first 24 hours.

Author: Steve Hanley

I write about technology, the environment and anything on wheels from my home in Rhode Island. My Miata and I team up for occasional track days at Lime Rock and Watkins Glen. Please follow me on Google + and Twitter.

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  • Franck CHEVALLIER

    I think you’re a little optimistic for the first 24 hours, but 50 000 reservations seem easily credible.

    • Carl Raymond S

      Yes, i think the flaw in the calculation is assuming the reservation desk won’t get to the end of the queue before the end of the shift. Especially in stores like Sydney where tax credits don’t exist.
      100,000 is possible, but I’d prefer to stay grounded.

  • Taylor Marks

    Calling it “the first 24 hours” seems quite misleading to me. Tesla employees have been allowed to place their reservations for the past few weeks. People in Australia will have been able to place their orders for 42 hours at that point.

    I think it’s a bit unlikely that Tesla will reveal deposit numbers at that point. I think more likely at the very start of the presentation, Musk will say that while the stores were open on March 31st, they received # deposits.

    They received 600 Model X deposits in the first month. A normal rule of thumb for projecting car sales is that for every $5K you drop the price by, you double the sales. The Model 3 is $45K cheaper than the Model X… which suggests it’ll have about 500 times as many reservations… so 300K reservations in the first month? I’m not sure how reliable that rule of thumb is though… especially when you’re talking about such a huge jump in price and with a company as young as Tesla (they’re a lot better known now than they were 4 years ago when Model X reservations began…)

    In any event… I’m guessing that if you don’t make your deposit on March 31st, you’re not going to get the $7500 tax credit from the US government… and even people who do make their deposit on that day might not get it.

    • Ryan

      I’m guessing even people who deposit the moment their store opens in the morning aren’t going to get the $7,500 credit. With Model X orders where they’re at currently (and production ramping up), the full credit may not even be available to the employee orders.

      • Taylor Marks

        Tesla has 50K cars sold thus far in the US. 25K of them were sold in 2015. They’re expecting to sell 38K cars in the US in 2016, which will bring them up to 88K. Assuming they have another jump of 50% in 2017, they would sell 57K, bringing them up to 145K sold in the US through the end of 2017. So long as deliveries of the Model 3 start by the end of 2017 as they currently say it will, the first 55K people should get the full $7500 credit on the Model 3.

        15K might go to employees.

        They’ve sold 50K cars in the US, meaning they have no more than that many existing US customers. But some of those cars belong to people who already own multiple Teslas, which reduces how many unique customers they have in the US. Some of those customers aren’t interested in having the Model 3. Lets say that 15K existing customers will want the Model 3.

        That leaves 25K full incentives available to first time, non-employees who want the Model 3. Plus, there won’t be exactly 200K incentives – there will be more than that. The full incentives will be available for at least another 3 months after that (and maybe up to 6 months after that). After that, there’s going to be another 6 months of $3750 incentives, and then another 6 months of $1875 incentives before the EV incentives finally end for Tesla customers.

        Tesla says they want to be making 500K cars per year per Gigafactory. If they managed to produce that many cars for the US from the get-go (that would be miraculous, but lets just use it for illustration), they would be making about 125K cars per quarter. That would mean that they could sell between 125K and 250K cars still with the full incentive after they cross the 200K mark.

        We’ll see what happens… I definitely expect all of the employees, all of the existing customers, and at least some of the new customers that line up before the store opens to get the full incentives.

      • James

        It will be interesting to see if Tesla balances U.S. versus foreign shipments in order to maximize customer incentives. If I was running the ship I would be sure to ship unit 199,999 at the end of a quarter in order to maximize customer benefit.

      • Taylor Marks

        There’s a balance to be had here. If you ship number 199,998 at the end of one quarter, you wouldn’t decide to only ship a single car in the next quarter – you’re just being silly. At the same time, shipping number 200,000 at the tail end of a quarter is also a bad choice.

        I’m not sure where the break even is. I’m not sure how far from the end of the quarter you’d have to be for it to be worth it to hold production of cars for the remainder of the quarter.

        Maybe you’re right and it won’t be a matter of holding production like I say, but on deciding whether the cars you produce will be sold in the US or if you’re going to ship them to other countries.

      • neroden

        The point James is making is that if you ship car 199,999 (for the US) at the end of a quarter, and delay car 200,000 (for the US) until the beginning of the next quarter, you push out the expiration of the US tax credit by a full quarter.

        Since they sell half their cars outside the US, I think they will do something like this — shift to foreign-bound production just long enough to extend the US tax credit expiration by one quarter. Or maybe even two.

    • Steve Hanley

      I am caught off guard by your remarks about reservations beginning first in Australia. I had assumed the first reservations would be taken as Tesla stores on the East Coast. Not saying you are wrong; just haven’t seen that stated anywhere else. Do you have a source for that information?

      • Carl Raymond S

        It’s been reported in local publications here in Sydney.

      • Steve Hanley

        Dang. And here I let my subscription to the Sydney Morning Herald lapse last month!

        ; – )

        I think that’s quite interesting. And I’m guessing that would come as a surprise to many people.

      • tdog4444

        do you have a source?

      • Carl Raymond S

        It was a month ago now. I can’t recall which paper, but I drove past the Tesla shop and chatted with the guy who stood in line for two days to place the very first order. He ended up all over twitter.

      • tdog4444

        right, i didn’t think there was an actual source. thanks.

  • Electric Jen

    Steve, I think you are exactly correct. 24-36 hours maybe just to give a reasonable amount of hours after the online opens for folks in different time zones to wake up and order the morning of April 1st, their time. Excellent point about impulse buyers. When I requested off on 3/31, my boss’ response was “Should I reserve one?” Out of nowhere.

    • Steve Hanley

      Thanks, Jen. Obviously, all of this is speculation on our part, but the interest level in getting an early reservation is unlike anything the marketplace has ever seen. True, there are comparisons being made to the introduction of certain Apple products, but those items did not have to deal with the potential loss of a significant cash incentive.

      The news stories about people in Montreal planning to line up outside their local store two days early make me think the number of reservations will be higher than some expect. Remember that orders for the Tesla PowerWall were through the roof within hours after they were first announced.

      Should be an interesting week!!!!

  • Taylor Marks

    I find this number hard to believe because I can’t think of any precedent. Has there every before been a company that sold a product which got great reviews with a high price tag for a few years, then they released a new product in the same category with the price cut in half? What kind of sales did they have with the great reviews? What kind of sales did they have with the new price now cut in half?

    I think a good comparison might be the original iPod, released in late 2001 for $500, vs the iPod Mini, released in early 2004 for $250. I can’t find the stats though… how many of the original iPod were sold from 2001 to 2004, and how many iPod Mini were sold in the first month of availability? If the numbers are about the same, then I think it might be reasonable to think that Tesla could sell the same number of Model 3s in 24 hours as they sold the Model S over 4 years. If the iPod Mini’s sales were lower, then I would think the Model 3 will similarly have lower sales.

    Then again, I’m talking about a product that’s just 1% as expensive as, and not anywhere near as important as, a car.

    • neroden

      Ford from 1910 (Model T built with standard production methods), to 1911 (production-line Model T). Sales doubled every year for several years after the (much cheaper) production-line model came out.

  • serge delinois

    I think 100k units is reasonable but not in 24 hours. I would think the first week.

  • Sparky

    It’s great to look back and see how wrong we can be