Tesla pulls big demand lever on Model 3 – raising questions about demand

Tesla originally said that it isn’t including the Model 3 in the referral program because it is a demand lever and Tesla doesn’t need more demand for the Model 3.

That has changed this week as Tesla added the Performance version of the Model 3 to the program with a big incentive – raising questions about demand.

As we reported last night, Tesla added Model 3 Performance to the referral program with unlimited free supercharging for new orders until September 16th.

It’s an incentive that at one point Tesla was selling for over $2,000.

Now the company is including it in the cost of the Model 3 Performance when buyers use a referral code, which was already the case for the Model S and Model X and results in virtually all buyers using a referral code to take advantage of the incentive.

It comes after Tesla pushed back Model 3 delivery windows on new orders last week – indicating that Tesla had enough orders for the next 2 months.

As of last month, Tesla said that it still has about 420,000 reservations for the Model 3 worldwide, but the vehicle is currently only being delivered in the US and Canada.

Electrek’s Take

As we discussed when Tesla pushed back Model 3 delivery windows, I think Tesla is still experimenting on what demand lever to pull to maintain an order rate that matches the recently increased production rate.

Tesla actually warned last month that they believed the Model 3 new order rate would soon exceed the production rate after they started test drives, which began last month.

It looks like it actually happened – at least briefly. Elon Musk said that Tesla had over 7,000 new orders (5,000 Model 3’s and 2,000 S/X) in a single week last month.

But there’s no doubt that Tesla has now felt the need to pull another demand lever – albeit only for the Model 3 Performance.

I honestly didn’t think Tesla would need to add such an incentive like that to boost demand for the vehicle. Especially now that they are trying to become profitable in the second half of the year. While it doesn’t seem like a direct incentive that would affect the gross margin, they will actually have to put aside some revenue for the Supercharger network from those sales.

I am not overly worried about demand for the Model 3, but I certainly think it raises questions since Tesla itself said that they wouldn’t include the Model 3 in the referral program until they need to generate demand. I would like Tesla to release some details about the breakdown of orders between the different versions and today’s earnings call would be a good occasion to clear the air.

What do you think? Let us know in the comment section below.