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Tesla Model 3 reservations approach 400,000, but production remains a challenge

Updated Apr 14th, 2016 3:02PM EDT
Tesla Model 3 Reservations
Image: Tesla

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If you thought that Tesla Model 3 momentum had died down, think again. During a recent speech in Amsterdam, Tesla VP of Business Development Diarmuid O’Connell revealed that the number of Model 3 reservations is now approaching 400,000.

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Originally reported by Electrek, O’Connell’s statement drives home how strong of a demand there is for Tesla’s incredibly hyped and long-awaited mass market EV. Of course, the real question now isn’t whether or not the Model 3 will engender the same level of interest as the Model S, but whether or not Tesla can actually manufacture the Model 3 at scale to meet shockingly high demand.

Tesla, of course, is clearly not blind to the challenges that lie ahead. When asked about production plans, O’Connell explained that while the volume of Model 3 reservations is a great success, “the real success will be delivering a great product” at scale. Indeed, even Elon Musk, in the wake of the Model 3’s reservation tally, noted via Twitter that the company would have to rethink production planning.

So while it’s encouraging that Tesla is aware of the challenges ahead, it’s worth noting that the company has not once ever met a launch deadline. Remember, the Roadster was delayed, as were both the Model S and the recently released Model X.

Summing up things nicely, Jean-Louis Gassée recently articulated that sometimes “the design of the production process trumps product engineering prowess.” In other words, the engineering of the Model 3 may be world class, but it won’t mean a whole a lot if Tesla can’t be similarly innovative when it comes to manufacturing at scale.

Gassée adds:

Today, however, Tesla’s factory produces a relatively low volume of luxury cars. Tomorrow’s Model 3 production system will need to be meaningfully different in order to achieve the volume and cost reductions that the Model 3’s affordable price tag requires…and reducing production costs means an additional capital outlay. Last February, the company said it didn’t expect to need outside capital, but that was before the deluge of Model 3 orders. (Of course, the excitement for the new product could make it easy to raise money…)

It’s an enormous challenge, but if Musk manages to come up with a new, not merely tweaked, production process, Tesla might be on its way to fulfilling its leader’s prophecy of 500,000 cars a year by 2020…but we’d need to hear more about that process. So far, we have little or no information.

What’s crazy is that Elon Musk’s promise of being able to churn out 500,000 cars by 2020 used to elicit a bit of skepticism insofar as people doubted that demand might reach 500,000 that soon. With Model 3 reservations likely to hit 500,000 before the end of the year, the initial 2020 deadline may be need to be adjusted.

Yoni Heisler Contributing Writer

Yoni Heisler has been writing about Apple and the tech industry at large with over 15 years of experience. A life long expert Mac user and Apple expert, his writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and TUAW.

When not analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions.


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