Tesla has been having trouble rolling its Model 3 off the production line, and as a result, investors have been getting antsy about the repeatedly-delayed production ramp. But there’s another group that’s going to be quite upset by the Model 3 delay: car buyers. In fact, Tesla could be in serious trouble if it doesn’t fix the problems fast.
Tesla has made much of its effort to target the mass market with the Model 3, but unfortunately, this is a different kind of buyer than what the automaker is used to dealing with. Luxury car buyers tend to be more lenient because they want what they want and can afford to wait because they don’t necessarily need a new car at a specific time, but for the average consumer, a long delay would be a deal-breaker.
A new study conducted by Autolist found that most car buyers would cancel their Model 3 order if it’s delayed too long. The firm surveyed more than 1,000 car shoppers after Tesla’s Q4 earnings report. The automaker said it continues to struggle to ramp Model 3 production to 5,000 cars per week. That milestone has now been pushed back to the end of June after two delays.
The survey asked car shoppers how long of a Model 3 delay would they tolerate before canceling their orders. Seventy-two percent of respondents indicated that if they paid the $1,000 deposit on a Model 3 and were told it would be delivered in 12-18 months, they would cancel their order if the car didn’t arrive within six months of that window. Within that group, 37% indicated that they would not tolerate any Model 3 delay at all after the 18 months are up, while 35% said they would cancel three to six months after the 18-month window is up.
Unsurprisingly, the quality of the Model 3 is a deal-breaker for most car buyers as well. The survey found that the quality would have at least some impact on 74% of buyers. This is particularly concerning given what KeyBanc analysts said recently about Model 3s arriving at sales centers with minor blemishes that must be repaired before they can be delivered. Other analysts have also said that they’ll be watching carefully to see what the quality of the first Model 3s is like because any signs of problems will have a negative impact on demand.
Interestingly, more than 70% of respondents incorrectly believe that Tesla is actually profitable. On the contrary, analysts have been concerned about the rate at which the company burns cash for years.
Tesla stock rose by less than 1% to as high as $326.17 in intraday trading on Wednesday.
