When Elon Musk isn’t successfully launching a HyperLoop pod, distrusting A.I., and blasting stuff into space while wearing a crushed velvet dinner jacket, he’s trying to achieve the lofty goal of selling you the last car you’ll ever buy. Hopefully “the last car” means you love the Tesla brand, not that the car’s extensive computing power goes all Skynet and drives you into the sea.
Thanks to Tesla’s quarterly earnings call on Wednesday, we now know a little more about that car. We already knew the Model 3 is going to be Tesla’s first entry-level vehicle, priced at $35,000 before incentives and going 220 miles between charges. What was revealed on Wednesday is how many people have cancelled their preorders of the Model 3 and what happened to Tesla’s share price afterward. Both may be a surprise.
63,000 people have cancelled their order, which sounds disastrous, but let’s put it into perspective. Tesla still has 455,000 preorders of the Model 3, even though many of those orders can’t be filled until late in 2018. The daily number of orders has also spiked. Tesla is receiving 1,800 new orders each day but is currently on pace to be able to build only around 660 cars per day by the end of the year. The cancellations leave Musk unphased. He told investors, “It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour-and-a-half wait for hamburgers — do you really want to encourage more people to order more hamburgers?”
Shareholders also seemed unphased. Telsa’s stock rose 3.8%, in part because the company was expected to lose $1.88 per share last quarter but actually lost $1.33. Telsa currently holds $3 billion in cash, and that’s after they spent nearly $1 billion last quarter. In addition to new vehicles, they also built the world’s largest lithium ion battery and tripled the number of their superchargers available in the U.S. to prepare for a large number of Model 3’s hitting the road.
During the earnings call, Musk also revealed a plan for their supercharger stations that could make the Model 3 more user-friendly and appealing:
“We’ll also be experimenting with our first, I dunno what you’d call it, mega Supercharger location, like really big supercharger location with a bunch of amenities so we’re gonna unveil the first of those relatively soon. I think we’ll get a sense for how cool it can be to have a great place if you’ve been driving for three four hours to stop, you know, have great restrooms, great food, amenities, hang out for half an hour, then be on your way.”
Considering the biggest drawbacks of the Tesla seem to be price, charging time, and available charging stations, this would make a big difference. They’ve already addressed the price (releasing the midpriced Model 3) and tripled the available charging stations. Setting up new charging stations that can keep people entertained during the wait when traveling long distances — it goes 130 miles on 30 minutes of charging — would make electric-only vehicles more attractive to people who want to do more than commute to work and charge at home. We might be ditching gasoline engines sooner than we thought…