Tesla (NASDAQ: TSLA) continues to be one of the most popular carmakers right now. And that’s mostly thanks to its CEO, Elon Musk, who continues to keep people and potential customers intrigued by his “big” ideas for Tesla.
And he definitely needs to keep their attention, at least in keeping their interest in Tesla’s newest car model — the Model 3.
It was around 2007 when the business plan for the Model 3 came to fruition. The Model 3 will be Tesla’s first mass-market electric car.
Finally nine years later, the Model 3 was unveiled in March 2016.
During the Model 3 unveiling event, over 115,000 people reserved the Model 3. And 24 hours after the opening reservations, Tesla had advanced orders for over 180,000 vehicles.
And just two days after that, it was reported that there were 232,000 reservations, which would represent $115 billion in potential sales for a car that wouldn’t be delivered until sometime in late 2017.
Now, fast forward to 2017 and there’s still no car. However, Tesla did just announce that the Model 3 will begin its production next month (July).
The 400,000 customers who preordered the vehicle will finally be able to see what they’re paying for.
It’s really amazing to think that these customers were so excited about the Model 3 that they didn’t even know what it looked like or what kind of features it would have before they put down payments on the car.
And that further proves the type of following that Tesla has as a company along with the fact that it’ll always have loyal customers who are willing to hold out for its products… no matter how long.
Is the Model 3 Ready for Production?
If all goes as planned, these customers will have their Model 3 cars in their driveways by sometime in mid-2018.
Tesla’s Model 3 is the most anticipated electric car of the decade. It will be the affordable electric sports sedan that everyone has been dreaming of.
It’ll be eco-friendly, and the base model is expected to get a 215-mile range that’ll have larger batteries with longer ranges — all of that with a price tag starting at $35,000.
But those features aren’t the main selling point — the vehicle’s autopilot self-driving feature is expected to be a standard feature.
Those are the only details that Tesla’s willing to share with the public at the moment.
With only that limited information about the car’s makeup, it’s hard to imagine that the Model 3 will be as affordable as Tesla is making it out to be — especially when you consider all of the technology and production that’ll be involved for each vehicle.
For example, we still don’t know what kind of material the car will be made out of. If it’s built from aluminum, that would start to get very pricey.
This car will either give life to Tesla or kill the company dead in its tracks. Within the first couple of years, the car is expected to create 75,000 vehicles a year. So, what does that mean? It means that Tesla will need a lot of capital to keep production steady.
Tesla has already increased its borrowing cap by $800 million as it gears up for its Model 3 production in July. It increased its credit line with Deutsche Bank by $625 million, which brings Tesla’s total revolving credit line with the bank to $1.825 billion.
It’s getting really difficult to believe that Tesla will follow through with its plans for the Model 3 instead of having us wait around for another year for it to produce the vehicle. Baird Equity Research analysts met with Tesla’s management last week and that meeting left them feeling bullish toward the company.
The news of Tesla’s increased credit line and the analysts’ bullish stance could be the reason behind why shares were down to $375 Tuesday morning after a Monday close at $383, along with a continued decrease to $362 when Tuesday closed.
July will be the moment of truth for Tesla…
Until next time,
Jennifer Clark
Pro Trader Today