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Tesla is sending out e-mails to all Model 3 reservation holders in North America this week informing them that their electric sedans are ready to order and asking for an additional $2,500 to fulfill their orders.
The move could help Tesla in its drive toward profitability this year. Chairman and CEO Elon Musk has promised Tesla would not only be able to produce 5,000 Model 3s per week by the end of this quarter, but that the electric vehicle maker should be profitable and cash flow positive in the second half of the year.
Tesla ended the first quarter with a cash balance of $2.7 billion. It said then that it still expects to spend $3 billion. Deposits for Model 3 vehicles would give Tesla some of the cash that it needs without having to further dilute earnings through stock sales or by issuing debt.
Would-be Model 3 owners already put down a $1,000 refundable deposit to “reserve” one of Tesla’s Model 3s. Those reservation holders must pay an additional $2,500 to turn their reservations into an order, at which point the original $1,000 deposit goes toward the overall payment for the car. Buyers can cancel their orders within three days for a full refund, the company confirmed, but after that their money is Tesla’s for good.
All money paid upfront goes toward the price of the car. This is how Tesla's "pre-sales" have generally worked.
Buyers who confirm won't immediately get a specific delivery date, but Tesla's email says delivery could happen "in as soon as 2-4 months." Tesla typically schedules delivery or pickup appointments within two weeks of the date they expect to deliver a Model 3 to a customer.
The company has not yet manufactured a base-model version of the Model 3, which it has promised to sell for $35,000. Instead, it's produced versions with premium features, such as longer range, a higher top speed and all-wheel drive, which cost between $49,000 and $72,000.
Reservation holders who do not want the higher-end versions can hang tight, or request a refund.
In a first-quarter shareholders letter Tesla said, "Model 3 net reservations including configured orders that had not yet been delivered continued to exceed 450,000 at the end of q1."
Among others, Goldman Sachs is skeptical that Tesla can make good on all of its ambitions near term. This week, the firm issued a note reiterating a sell rating on Tesla's stock, recapping the company's history of missed production goals and noting that investors are beginning to focus not on short-term bursts of vehicle production, but on: sustainable, high volume manufacturing; vehicle profit margins; and whether or not Tesla can get customers to buy its highest-priced cars.
A customer forwarded Tesla's e-mail to Model 3 reservation holders. Here's what it says: