Electric Cars

The 'affordable' Tesla Model 3 is still months away

Model 3 production rates are the biggest thing standing between the public and the $35,000 Tesla.

Tim Stevens/Roadshow

When Elon Musk discussed details of two new Tesla Model 3 variants, both of which are more expensive than currently available configurations, many folks were left wondering where the inexpensive, shorter-range variant is. Thankfully, Musk has an answer to that question.

In a Twitter conversation, Musk explained that Model 3 production rates are the key to getting its most affordable variant out the door. Specifically, Model 3 production must be at 5,000 cars per week for between three and six months before Tesla can make the financials work. If Tesla were to ship its most affordable variant right away, it would "cause Tesla to lose money and die," per Musk's tweet:

According to Bloomberg's Tesla tracker, which estimates Model 3 production rates in a given week based on a variety of inputs like VIN submissions, Tesla's currently sitting at about 3,000 cars per week, with peak production pushing that number a bit above 3,500 cars per week. Tesla aims to produce 5,000 cars per week by the end of the second quarter of the year, and a forthcoming shutdown to tweak automated processes hopes to push it closer to that goal.

The automaker has also updated its delivery timelines for customers placing new reservations. According to an email Tesla sent out, that wait is now estimated to be between six and 12 months, down from 12 to 18 months. Tesla says the shortened timeline can be attributed to an increased production rate. It's all estimates anyway, and given Tesla's history of pushing back target dates, take everything with a grain of salt.

Tesla's decision to roll out its most expensive (and highest-margin) Model 3 variants first makes sense given its current lack of scale and reserve cash. Traditional automakers tend toward the opposite cadence -- unveil the most affordable, mass-market variants first, followed by increasingly more expensive and higher-performance configurations. Honda puts the Civic on sale before the Civic Type R, BMW rolls out the 3 Series before the M3, and so on. But those automakers have the benefits of solid financial standing, consumer loyalty and loads of facilities at the ready. Tesla's still working to establish those.

Folks looking for the mystical $35,000 Model 3 might also lose out on that $7,500 federal tax credit. The program begins to phase out after an automaker delivers 200,000 eligible vehicles, dropping to $3,750 for six more months' worth of sales, then being cut in half again for another six months before disappearing entirely. Tesla said in an SEC filing that it expects to hit that 200,000 mark some time in 2018, which means the folks hunting for a $35,000 EV bargain might have to face reduced incentives or even (dramatic gasp) pay full price.