For people who put down a $1,000 deposit for a Tesla Model 3 as long as two years ago, the big day has arrived. Specifically, the day has arrived when they can give Tesla another $2,500 and then wait a few more months for their car to arrive.
Days before the end of the second quarter, Tesla is now allowing all reservation holders in the United States and Canada to place orders for the Model 3.
Customers will be able to choose between several variants of the Model 3—including the high-end “performance” model—as well as choosing colors and option packages. However, the low-end version of the Model 3 with its long-promised $35,000 price tag isn’t available to order yet.
Each customer will get a specific delivery estimate based on the model they choose and their position on the waiting list. A typical delivery window is two to four months.
While the original $1,000 Model 3 deposit was fully refundable, customers who pay the extra $2,500 will be locked in three days after placing an order, the company told CNBC. That isn’t a new requirement—a Tesla spokeswoman told Ars that the company has long asked customers to pay a $2,500 deposit when they order other Tesla models.
The orders will provide a big cash infusion
Tesla CEO Elon Musk has promised to reach a Model 3 production rate of 5,000 units a week by the end of June. That rate of production could allow Tesla to fulfill a lot of the orders that flood in this week in the coming months.
But Tesla has a long history of missing optimistic production targets. And even if Tesla is able to sustain a Model 3 production rate of 5,000 units a week in the second half of 2018, that only translates to 65,000 units per quarter. With 450,000 Model 3 reservation-holders globally at the end of the first quarter of 2018, it would take almost two years for Tesla to clear out the backlog.
The good news for North American customers, though, is that Tesla hasn’t yet opened up ordering to all reservation holders overseas. So while it might take a couple of years for Tesla to get Model 3s to everyone who pre-ordered them, customers in the United States have a decent shot at getting them sooner.
The decision to open up orders may reflect Tesla’s management’s increased confidence that Tesla can hit its production goals and churn out more than 100,000 Model 3 cars in the second half of the year. But it may also reflect the fact that Tesla needs cash.
Tesla has lost hundreds of millions of dollars per quarter for several quarters in a row, funded by borrowing and by selling new shares. Musk insists that Tesla won’t need to raise any more money before reaching profitability later this year. But many Wall Street analysts are skeptical of his optimistic projections.
But accepting $2,500 each from tens of thousands of fans would put tens—if not hundreds—of millions of dollars in Tesla’s bank account. The money effectively acts as a short-term loan from customers, helping Tesla cover its costs as it ramps up to high-volume production.