‘Model 3’ depositors stay put as wait in line lengthens

Bloomberg

Brian Lawley was among the first to reserve a Tesla Model 3 after standing in a lengthy line in March 2016 to plunk down $2,000 for not one but two reservations. Almost 20 months later, he’s not going anywhere—even though the wait just got longer.
“I just want Tesla to get the Model 3 right, even if it takes them an extra six months,” said Lawley, 53. “I view any delays as a good thing to make sure that the quality is excellent.”
Lawley isn’t alone. Even as the company led by Elon Musk struggles with manufacturing bottlenecks and pushes back production targets by at least a quarter, many reservation holders aren’t budging. Bloomberg News contacted 20 consumers who paid deposits for the Model 3 and none had cancelled their orders.
Regardless of the concerns raised by slower output and an uncertain future for US electric-car tax credits, Nomura analyst Romit Shah predicts the affinity for Tesla Inc. products will prevail.
“We believe there is a real passion for the brand,” Shah wrote in a report to clients that reiterated a $500 price target for Tesla shares, the highest on Wall Street. “It is bigger than loyalty because much of the enthusiasm comes from people who have never owned a Tesla. The only comparable we see is the iPhone.” After Tesla announced this month it won’t hit a production rate of 5,000 Model 3 sedans per week until March—not December, as initially planned—reservation holders say they were alerted their already vague delivery date would be pushed back.
Lawley, the CEO of a consulting firm, said he now expects to get his first Model 3, which will have a longer-range battery with 310 miles per charge, around January, roughly a month later than anticipated. The second car, a dual-motor version, may not arrive until the end of 2018, though Tesla’s timelines have been known to slip.
“It seems to me that people would be willing to wait since they were never given a firm date when they would take delivery in the first place,” Edmunds analyst Jessica Caldwell said. “The long wait seems to be building anticipation.”
Tesla’s total deposits—which also includes money consumers put down for Powerwall battery packs and the more expensive Model S sedan and Model X crossover—rose 14 percent in the third quarter from the previous three-month period, even after Musk told employees that the company would be entering “ production hell.”
Tesla ended up making just 260 Model 3 sedans in the third quarter, far fewer than the company’s projection of 1,500. “Demand for Model 3 is not going to be a constraint for quite a long time,” Tesla said in its third quarter letter to shareholders.