Will The Model 3 Keep Tesla’s Stock Momentum Going?


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The CEO of Tesla (TSLA), Elon Musk, had unveiled the new Model 3 Tesla on March 31 in Los Angeles. The CEO presented the company’s new electric car which boasts up to 200 miles of travel, and a $35,000 price tag. Tesla is known for creating a lot of hype for its new electric car models, and this new Model 3 is no different.

Reservations Gone Wild

During the week that the presentation was announced, there were already 115,000 reservations placed for the new car. This is quite impressive for two very good reasons. The first being that it is impressive that so many people had placed pre-orders for a car that will probably not ship until late 2017. The second reason is that each person had to put down $1,000 in order to pre-order the car. The high demand of the vehicle does make sense though, because this will be Tesla’s first electric car that is cheaper version than all other models. The Model S is a car which not many people can afford to buy. The cost of buying a Model S is anywhere between $61,000 to $75,000. With this new price tag, it would allow a broad range of an audience, that would be able to buy an electric car. Once the unveiling was complete, and the company started taking pre-orders the numbers got bigger. In just a matter of two days Tesla had received 276,000 orders. Elon Musk even tweeted that “if the trend continues” then it will be possible to achieve up to 500,000 orders.

Factories Play An Important Role

There most certainly is a huge demand for the Model 3 electric car, but there is a big problem Tesla must overcome first. That problem is the ability to be able to produce up to 500,000 cars by the time the product launches. Elon Musk stated at the event that:

“Our Fremont factory, in the past, has actually made almost 500,000 cars a year”

It is hard to say whether such a number can be met. Even then that is just taking into account the Model 3 car production. This does not even include the need to continue to develop other models. Assuming all 276,000 people that pre-ordered the Model 3 car make good on their intent to buy, the company stands to make $7.5 billion.

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