Now that Tesla achieved its goal to ramp up Model 3 production to 5,000 units in a week, the automaker’s focus has shifted to try to make a profit during the second half of the year – something CEO Elon Musk has been telling investors for months.
This new focus is being felt by Model 3 buyers as their delivery schedules have changed.
The biggest impact has always been the delay on the least expensive version of the Model 3 with the standard battery pack.
Buyers still can’t get the promised $35,000 Model 3.
That hasn’t changed since Tesla delayed the production of the standard battery pack to the end of the year.
The gross margin on the smaller battery pack is expected to be tighter than on the current Long Range battery pack in production.
Tesla appears to be delaying the cheaper version of the vehicle until it can show that Model 3 production can be profitable with more expensive versions of the vehicle.
But that’s not the only way Tesla appears to be focusing on profit with its current Model 3 rollout.
Over the past week, we have received reports from half a dozen Model 3 reservation holders who recently converted their reservations into orders for the Long Range rear-wheel-drive Model 3, the only Model 3 in volume production for now.
As usual, they were given months-long delivery windows after confirming their orders, but that changed after they confirmed their payment method to be cash without any trade-in.
They all reported their delivery window being reduced to weeks – even just one week in a few cases.
The loophole for a quicker delivery still doesn’t seem to apply to the dual motor and performance versions of the Model 3, which Tesla has yet to bring to volume production.
CEO Elon Musk announced that the first Tesla Model 3 Dual Motor Performance rolled off the new assembly line last month, but it doesn’t seem like they are delivering them to customers yet.
After Tesla updated the Model 3 options and pricing last month, the automaker updated its official delivery timelines.
The priority has shifted to the more expensive performance version with a 2 to 4-month delivery window after confirming the order.
The Long Range battery pack with rear-wheel drive motor is now getting a 3 to 5-month delivery window, like the dual motor version without performance package, though as previously mentioned, it looks like Tesla can deliver the Long Range battery pack with rear-wheel drive more quickly.
We have been expecting the shift to focus on profit after reaching the 5,000 units per week milestone, but it looks like Tesla is really pushing it even more with a focus on customers who are paying with cash.
Musk has also previously mentioned that Tesla would stay away from leases for Model 3 until the company becomes profitable.
I think the focus on profit will only intensify until the end of the year. It’s why we are keeping an eye out for Tesla slowing down the rollout of other programs.
Musk’s prediction that the short position on Tesla would explode this week after they announced the production milestone didn’t happen and now he seems to know that profit is the only solution:
— Elon Musk (@elonmusk) July 5, 2018
What else do you think Tesla could do to try to achieve profitability in the next few months? Let us know in the comment section below.
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