Tesla is finally starting to iron out the Model 3 production ramp-up that caused delays for the new electric car, which is currently only being delivered in the US and Canada.
CEO Elon Musk has now commented on the international expansion in Europe and Asia, which is now planned for next year.
Model 3 production started in July 2017 and at the time, Tesla was planning to launch the vehicle in Europe in the latter half of 2018, but the production ramp has been delayed by about 6 months.
While the production has been improving lately, it looks like the delays are still affecting Model 3 expansions in new markets.
Last weekend, Musk commented on the rollout in Europe and Asia:
The CEO confirmed that the Model 3 will hit the left-hand-drive markets in Europe and Asia during the first half of 2019 and that the right-hand-drive Model 3 will be ready “probably” around the middle of 2019.
Musk also pointed out that the Model 3 has been designed to easily switch production between left-hand-drive and right-hand-drive due to the “symmetry”. For example, the Model 3 doesn’t have an instrument cluster, which is one less thing to move to the other side of the cabin.
We already started seeing Model 3 vehicles showing up for sale in Europe on the gray market as importers started raiding the used market in the US to get the popular vehicles in the continent.
European and Asian Model 3 reservation holders will be happy to have an update on the timing for deliveries.
We also got several pieces of evidence lately that Tesla is currently changing its Model 3 delivery strategy to optimize the use of the Federal tax credit in the US.
Once an automaker delivers its 200,000th electric car in the US, the $7,500 tax credit starts to phase by being cut in half after the end of the quarter following the quarter in which a manufacturer delivered the 200,000th electric car.
It means that the timing of that 200,000th electric car delivery is important, but the production rate when you hit the mark is also important.
At this time, it looks like Tesla is pushing to hit the threshold in the third quarter 2018. By waiting to launch in other markets until next year, Tesla could focus its important Model 3 production capacity in the second half of 2018 for deliveries in the US.
If Tesla achieves its targeted production rate of 5,000 units per week, the optimization of the Federal tax credit is worth up to $240 million in savings for Tesla customers in the US.
The good news for European and Asian markets is that demand is likely to fall in the US after the tax credit starts to phase out and therefore, while they might experience a delayed delivery timeline, Tesla is likely going to be able to focus its higher production rate at that time for deliveries in those markets.
The company will likely be able to work quickly through its European and Asian backlog of reservations.
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