With Tesla‘s (NASDAQ:TSLA) weekly Model 3 production rate recently hitting 5,000 units per week — more than double the combined production rate for its Model S and X — the automaker is finally transitioning from “anti-selling” its Model 3 to putting in some effort to attract new customers.
Tesla’s moves to garner new customer orders come at an integral time for the company. With the promised $35,000 version of the Model 3 yet to launch, it’s to solicit higher demand for higher-priced, premium versions of the vehicle to help the company become cash flow positive in the third and fourth quarters of 2018.
Pulling some demand-generation levers
Up until recently, Tesla has done very little to try to generate demand for its Model 3. With over 400,000 reservations for the vehicle and only about 30,000 units delivered, this made sense. Indeed, as of May, Tesla only had its Model 3 on display in fewer than 20 stores globally, according to its first-quarter shareholder letter.
But now Tesla is beginning to pull some levers to drive demand. In its first-quarter shareholder letter, it said it would “deploy significantly more Model 3 vehicles” to its stores during Q2, which ended at the end of July. And now performance versions of the Model 3 are beginning to be made available for test drives. Indeed, a recently launched Model 3 test-drive program in the Bay Area attracted about 30,000 test-drive requests, according to Electrek. In addition, Musk said on Twitter this week that it built about 100 Model 3 performance versions of the vehicle for test drives in its stores.
The most recent development in Tesla’s increasing efforts to boost demand for Model 3 is the automaker’s move to make its Model 3 configurator available to non-reservation holders in the U.S. and Canada. Customers in the two markets can now design Model 3 vehicles on Tesla’s website and place their order online, bypassing the reservation process.
In the July 2 second-quarter update on vehicle deliveries and production, management said net reservations for Model 3 declined from levels above 450,000 in May to about 420,000. But management was unfazed about demand for Model 3, noting it expected orders for the vehicle to grow faster than production when customers can finally see and test drive the car at Tesla stores.
Anti-selling the base version of Model 3
In some ways, Tesla is still anti-selling its Model 3 — but only the $35,000 version with a standard battery. Not expected to launch until late this year or early next year, the $35,000 Model 3 still isn’t available to order. By bringing performance versions of the Model 3 to its stores and opening up its Model 3 configurator to the public when the base version of the Model 3 isn’t even available, Tesla is clearly trying to drive sales of higher-end versions of its vehicle.
With the prices of the long-range rear-wheel drive, all-wheel drive, and performance versions of the Model 3 ranging from $49,000 to $80,000, sales of these higher-end versions will help Tesla in its mission to be cash flow positive in Q3 and Q4.