The introduction of Tesla’s new Model S 60 coincided with the company achieving its production rate of 2,000 vehicles per week. It looks like the automaker has mostly worked through its production problems with the Model X, which means that for probably the first time, Tesla is not production constrained anymore and this is evidenced by the fact that the automaker is now trying to convince Model 3 reservation holders to buy the new lower price Model S instead.
When we first predicted the reintroduction of the 60 kWh Model S, we suggested that Tesla could offer to the more than 373,000 Model 3 reservation holders the opportunity to order a Model S instead. At $66,000 before incentives, the price is nowhere near the $35,000 base price of the Model 3, but it is the least expensive Tesla yet (aside from the short-lived Model S 40 kWh) and it could convince some people to skip the long wait for the Model 3.
A Tesla representative confirmed that it was the plan a few days later during a ‘Tesla Weekend Social’ event. The presentation described the initial customer response as ‘very good’ and said that the move aimed to lower the price of entry and expand the addressable market for Tesla’s lineup of vehicles before the upcoming launch of the Model 3.
Then adding that the unveiling of the Model 3 increased Tesla’s visibility in several important markets and the company wanted to offer a new option to potentially reduce the wait since the vehicle is not expected to enter production until late 2017.
But now we learn that Tesla is not simply putting the option out there for Model 3 reservation holders to potentially upgrade. The automaker sent out emails announcing the reintroduction of the Model S 60 to its mailing list, including Model 3 reservation holders, which is to be expected and not in any way special, but several reservation holders are also reporting having received another email, in which Tesla is directly addressing upgrading from a Model 3 reservation to a Model S order:
“We are thrilled to have just launched the new Model S 60 and as a valued model 3 reservation holder I wanted to personally reach out to invite you to University Town Center Showroom to experience Model S 60 and 60D. It is a wonderful opportunity to get into a custom designed Tesla with payments starting at $667/mth before gas and tax incentive savings. Depending on your current vehicle trade-in value the monthly payment could be even lower.
We know how excited you are to receive your Model 3 and wanted to ensure you had the chance to work with myself and our team to explore the options of getting into a Tesla even sooner. Please let me know if I can arrange a test drive experience for you or answer any questions. We would also be happy to review your current trade-in options as well. We are here to help you build your dream car and continue our mission to accelerate the transition to sustainable transport.”
This example was from a Tesla store in Florida, but reservation holders across the US and Canada have reported having received similar offers. A reservation holder claimed that Tesla is also cold calling to upsell Model 3 reservation for a lease on the new Model S.
Then to add to the mounting evidence that Tesla is trying to upsell Model 3 reservation holders, this week, the company shared a ‘customer story‘ of a couple looking into reserving a Model 3, but ended up buying not one, but two Model S sedans instead.
You can’t really blame Tesla for tapping into this new bank of hundreds of thousands of potential customers, but it shows that the company is not “production constrained” anymore since it is more actively trying to create demand for the vehicles in production.
Tesla CEO Elon Musk has referenced in the past the company’s ability to rapidly deploy tools to create demand, but he also added that it wouldn’t be useful because Tesla already had an important backlog at the time – and it likely still has a significant backlog for the Model X. Those tools ended up taking the form of an owner referral program and now this new tactic to upsell Model 3 reservation holders certainly looks like a great tool to create demand for the Model S.