Model 3 Pushes Tesla Motors Inc Shares Higher

Updated on

Some analysts have predicted that any news about the upcoming Model 3 would boost shares of Tesla Motors, and that’s certainly turned out to be the case. The automaker confirmed that it will unveil the mass market electric car on March 31 and begin in-store reservations the same day. Online reservations will begin the following day, and some are speculating about why Tesla is delaying them until the day after in-store reservations begin.

Model 3 production starts next year

A lot is riding on the Model 3 as Tesla looks to prove that it can execute—especially on time. The automaker pushed back the Model X launch multiple times, so timely execution is huge this time around. And then there’s the fact that Tesla (and its bulls) are banking on the success of the mass market car to cement its future.

So why is Tesla beginning in-store reservations of the Model 3 on March 31 and online reservations on April 1? It doesn’t really seem like a big deal really, although apparently some are speculating that the automaker is seeking an Apple-style response in the form of people lining up to be among the first to order a Model 3. This seems unlikely though as Tesla isn’t even legally allowed to accept in-store orders for its cars in some states. And then there’s the fact that March 31 is a Thursday, so the automaker is unlikely to see a mob of consumers wanting to order the Model 3 on that day since it is a weekday.

Teslamondo offers up some suggestions for the one-day difference, with most relating to the idea that Tesla may want consumers to interact with salespeople for various reasons, like selling additional items, education, exposure to the Model S and X in addition to the Model 3, and simple logistics. But all in all, does it really matter why online sales start a day later?

Timing is everything

The Model 3 will indeed start at $35,000 as promised, although tax subsidies will make the car as cheap as $27,500. This makes the speed at which Tesla can deliver its mass market cars even more important because those subsidies won’t stick around forever. A lengthy delay and a backup on the assembly line like what’s happening with the Model X could cause problems for consumers in some states, depending on the rules governing those tax credits.

Reserving a Model 3 before a tax subsidy ends may be enough to secure the credit in some areas, but most likely, that won’t be enough because the car hasn’t been paid in full. For more budget-conscious consumers like those who would be interested in the car, losing out on the tax credit may be a real deal breaker. SolarCity and other solar companies dodged a bullet when lawmakers extended the investment tax credit for solar installations, but these programs are not intended to last forever.

Also pertaining to timing, consumers should remember that the order in which reservations are being taken doesn’t matter much because the people who will get their cars first are those who order the most expensive models with the most potions. After all, the automaker’s gotta support the early capital intensive phase somehow in order to prepare for the less expensive models with lower margins. This isn’t a new thing either as Tesla has done this with its previous cars as well.

Tesla shares climbed by as much as 2.75% to $155.19 during regular trading hours today, putting the stock up by more than 8% year to date.

Leave a Comment