The Model 3 has been affecting Tesla stock for most of this year, driving the shares higher and higher as investors try to get a piece of the EV that Tesla hopes to ride into a firm place in the mass auto market. Execution is key right now, even as Tesla management has emphasized that their ambitions to steeply ramp up production come with a heaping pile of challenges, not only for them but mostly for the workers they pay to build the cars.

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How much will potential buyers put up with?

But before every Model 3 goes to the assembly line, a customer has to order it first, and then they have to keep their reservation despite a long wait for the car. Meanwhile, one firm has identified what could be a major pain point for both Tesla, in connection with the Model 3, and its stock. Just how much will customers put up with before they cancel their reservation?

You can bet that Tesla stock will plunge if there’s ever a whisper that buyers might be canceling their orders. After all, analysts and Tesla itself have been hyping the Model 3 as the ultimate answer to all the company’s cash burning needs. Therefore, whatever happens to the Model 3 will drive Tesla stock, either for the good or the bad. The automaker needs to climb out of the niche it has been in and attract the mass market buyer, or at least that’s what management has been telling investors.

Tesla owners report poor customer service

August has been a choppy month for Tesla stock as it closes out the first month of production for the Model 3. Bernstein analyst Toni Sacconaghi, Jr. and team conducted a survey of nearly 300 Tesla owners in July, and they recently held a conference call with their firm’s investors to reveal the results of that survey.

On one hand, they said Tesla owners rave about their cars, but on the other, they found a major problem that could prove to be a problem for the Model 3. They found that owners’ experiences dealing with Tesla’s customer service are pretty hit and miss, and they see this as a big concern for the Model 3.  According to Bernstein, the Model X launch was marred by “a myriad of service and quality issues,” and as a result, the firm’s analysts are concerned about Tesla’s brand being damaged and about Model 3 reservations potentially being cancelled due to it.

The firm’s survey revealed that 18% of Tesla owners rate their experiences with the company’s service centers as either “fair” or “poor.” Nearly one-third weren’t able to get an appointment for service within ten days, although this percentage widened to 40% in the year after the Model X was launched. Additionally, 16% couldn’t get a loaner car on their most recent service visit, and nearly one-quarter couldn’t get their problem resolved on the first visit.

How many Model 3 orders are at risk of being cancelled?

But what may be even more concerning for the EV maker is the fact that Bernstein found that just 70% of those holding a reservation for a Model 3 describe themselves as being “likely” or “very likely” to actually take delivery of the car. Thirty percent is quite a cut from the roughly 455,000 preorders Tesla says it has taken for the car.

One thing we would point out with the problems Bernstein identified among Tesla buyers is that the Model 3 is being sold to a much different type of customer than the Model X or Model S. Buyers fit firmly in the mass market category, which means they will tend to be less affluent than those who bought Tesla’s previous vehicles.

Such customers will be less able to put up with these types of problems. For example, less affluent customers may be less likely to own an extra car to drive when their Tesla is in the shop or be able to pay for a loaner in the event that Tesla can’t provide one, especially if their car is in the shop for an extended period. Model 3 buyers are also not early adopters, so they will probably be less understanding of any problems the company or its cars bring.

Here’s why mass market buyers may cancel their Model 3 orders

Further, as the Bernstein team pointed out, these first Model 3 deliveries are going to be critical because if quality issues arise, those who have preordered a Model 3 may cancel their orders. The wait time for delivery is exceptionally long, giving customers plenty of time to rethink their decision and cancel if they hear that the cars have problems. This is one good reason it makes sense to give Tesla insiders their Model 3 cars first because they can help serve as a secondary quality control team.

It’s also a good reason to deliver the cars that are loaded with the most options first. It gives these buyers less time to pull the trigger on cancellation, while also making them feel like they’ve received an extra perk for spending more money.

Unfortunately, this also creates another reason mass market buyers could cancel their Model 3 orders. As time marches on, the less likely buyers will be able to get all or even some of the federal tax credit on electric vehicles. For the average mass market car buyer, this tax credit could be a deal breaker, much more so than it might be for a luxury auto buyer who bought the Model S or Model X.

At this point, it’s looking like orders placed through early next year could still get some of the tax credit, according to one person who’s tracking Tesla’s EV sales in the U.S. to determine when that credit will run out. They’re updating their post on the Tesla forums regularly, so it’s worth checking out if that tax credit really would break the deal for you.

Tesla stock price target raised by uber-bull

So what does all this mean for Tesla stock right now? Morgan Stanley analyst Adam Jonas has been a longtime Tesla bull, and earlier this month, he claimed that “everyone” wants a Model 3, “doesn’t matter if you are a bull or bear on the stock.”

By mid-August, he bumped his base case price target for Tesla stock up from $305 to $317, saying that the Model 3 production ramp is going better than he had previously expected. He also raised his bull case from $511 to $526, representing approximately 50% upside to the stock if everything goes according to plan. But Jonas isn’t the only analyst putting a direct correlation between the Model 3 and Tesla stock right now. Much of Wall Street is doing the same thing, and it has been all year, which is why the shares have been on a tremendous tear.

Jonas has an Equal-weight rating on the shares, but his views have remained largely bullish, unlike other analysts who also have the equivalent of a Hold or Neutral tacked onto Tesla.

Bernstein says don’t chase Tesla stock at current levels

In their latest report which included the results of their owner survey, the Bernstein team said they remain bullish on the broader EV market in the long term, and they feel Tesla has several key advantages. However, they advise investors not to “chase” Tesla stock at current levels based on the problems they have identified in terms of execution around the Model 3 launch. They’re concerned that the automaker might have trouble producing the Model 3 at “good margins” and with “good quality.”

They also question the valuation of Tesla stock at current levels. The shares are up by more than 60% year to date, even after plunging in early July. Tesla stock has yet to recover fully from that plunge, and although it has rallied to reach the $350 range, it remains well off its all-time high of $386.99.

We can expect the next update on the Model 3 production ramp in Tesla’s next quarterly shareholder letter, which is expected in early November. Until then, Tesla stock may trade sideways for now or continue a small, steady upward march.