We were like most of you when the Tesla Model 3 made its debut. Our eyes were glued to computer screens as Elon Musk told us about a brave new future in which electric cars would be awesome and cost just $35,000 before government incentives. We could be a part of it too, he said, if we only gave him $1,000 of our hard-earned American dollars.
Only a grand for a down payment on a dream? Despite sounding like a rejected Springsteen lyric, it was enough to convince hundreds of thousands of people to throw caution to the wind and give Tesla their money.
But here we are, a couple of years later, and examples of The People's Tesla are merely trickling out of the factory in Fremont. Disillusionment is a natural thing to feel after having bought into Elon's version of the D.E.N.N.I.S. System, and as such, many people have reached the Separate Entirely phase and are asking Tesla for their $1,000 back, though getting that money isn't proving as easy as they'd hoped.
The cancellation submission process itself is straightforward, with around a half-dozen strategic clicks on your Tesla account being sufficient. Currently, the company is telling customers that it may be upward of three months before they see their money if they want it by check, or significantly less time if they want a refund via debit card. This seems to be a change from the experiences that customers were reporting last year.
On its Q4 earnings call, Tesla said it currently held over $600 million in deposits, the bulk of which were for the Model 3. That isn't exactly chump change, especially when you consider the rate at which Tesla is burning through money. The company is probably concerned (and rightfully so) that if it can't make its own production goals -- 2,500 cars per week by the end of March, 5,000 cars per week by the end of Q2 -- the number of refund requests will grow exponentially, thus complicating its already complex cash conundrum.
Another potential problem that could lead to many more cancelled reservations is the eventuality of the $7,500 EV tax credit going away once sufficient examples of the Model 3 have been produced and while that will happen Seeking Alpha predicts that between 20 and 40 percent of customers would cancel if the tax credit disappeared, which could lead to a serious dip in Tesla stock prices and a "bank run" which could, in theory, possibly tank the company (not that that's especially likely, in our estimation).(the first 200k cars get $7,500 off, then half that for two quarters, then half that for a final two quarters, after which it's gone entirely), It's likely that many of those who put down deposits were counting on a full $7,500 off in order to make the purchase of an EV and attendant charging facilities affordable. Financial insights blog
What remains true is that with each delay, particularly for the $35,000 variant of the Model 3, which is currently slated to enter production in Q1 of 2019, people get more and more frustrated, more of them will end up jumping ship, and Tesla's image will lose a little more of its sheen. We're rooting for Mr. Musk to succeed though because, despite their many flaws, Teslas are lovely cars and appear to be going in fascinating directions.