Published: Sun, August 13, 2017
Research | By Jo Caldwell

Tesla Model 3: Buyers & Cancelled Orders Suffer Lengthy Delays

Tesla Model 3: Buyers & Cancelled Orders Suffer Lengthy Delays

Musk offhandedly dismissed concerns about Tesla Model 3 cancellations - orders now stand at about 455,000 compared to Musk's proclamations to the press of about 513,000 preorders - as inconsequential and that original numbers were "just a guess".

Following our USA plug-in electric auto sales report, we've got last month's EV sales for Canada too.

During a conference call on Monday with financial analysts to discuss a new bond offering, CEO Elon Musk let slip that his original estimate of annual Tesla Model 3 totals was about 200,000 short - now he's saying that the all-electric vehicle company will likely produce 700,000 units of the Model 3 annually one day.

After Tesla made the announcement, Standard & Poor's reaffirmed its negative outlook for the carmaker and assigned a "B-" rating for the bond issue.

Meanwhile, the company is burning cash at a rapid rate.

With every conference call, investors naturally want news about upcoming products - and we do too, Tesla didn't disappoint - discussing the upcoming Model Y, a compact SUV. At around $35,000, it's hard to make an argument for the Chevy Bolt or BMW i3 over the Model 3. Let's not forget, Tesla's debt burden rose significantly in 2016 when it bought solar panel maker SolarCity. The eight-year bonds were priced at a record-low yield of 5.3 percent - a touch higher than initial talk of 5.25 percent.

Weighing in 400kg lighter than its large sibling, the Model 3 Performance should hit 100km/h in less than 2.3 seconds.

At the launch, Musk, however, warned that Tesla would face months of "manufacturing hell" as it increases production of the sedan.

The company expects the Model 3 to quickly reach positive gross margins as they reach volume production in late 2017 or early 2018, but they stay vague when it comes to guidance about being profitable. The sale was managed by Goldman Sachs Group Inc., Morgan Stanley, Barclays, Bank of America Corp., Citigroup Inc., Deutsche Bank and Royal Bank of Canada. The chief executive officer of London-based TwentyFour Asset Management, which manages $13 billion, said Tesla will need to raise more debt because it's burning so much cash, and it's likely to layer on new secured bonds.

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