Tesla Motors Inc (NASDAQ:TSLA) Says Preorders For The Affordable Model 3 Nears 400,000

Tesla Motors Inc (NASDAQ:TSLA) closed the previous week with almost 400,000 reservations for the mainstream Model 3. The company will start delivering the vehicle in late 2017. Model 3 starts at a base price of $35,000.

Despite the incredibly strong demand for Model 3, with preorders approaching 400,000 in just about two weeks, production constraints could complicate the picture for Tesla. The company failed to meet its delivery target for the Model X SUV, which starts at $80,000, during 1Q2016. The management complained about parts shortage as the cause for the missed sales.

Missed overall delivery

Tesla Motors Inc (NASDAQ:TSLA) delivered 14,860 vehicles in 1Q2016, with the total delivery comprising 2,400 units of Model X. The company had guided for delivery of 16,000 vehicles in the quarter. Model X features a complicated design, including falcon wing doors, which make it stand out. But the sophisticated design of Model X may have contributed to the delays in parts supply, making it difficult for the company to meet its delivery target.  Although Tesla had anticipated a supply shortage for Model X parts, the shortage lasted longer that it expected.

500,000 by the end of the decade

For 2017, Tesla is targeting delivery of between 80,000 and 90,000 vehicles (Model S and Model X). The company delivered 50,000 vehicles in 2015. When the mainstream Model 3 comes to market, Tesla targets to hit 500,000 deliveries by the end of the current decade.

Model 3 will be smooth

Noting the challenge with the production of Model X, Tesla Motors Inc (NASDAQ:TSLA) is hoping to sidestep similar challenges in the production of Model 3. The company is building a battery production facility in Nevada called Gigafactory that will help address cell supply issue and also enable the company pare the costs of battery acquisition.

Although Tesla Motors Inc (NASDAQ:TSLA) missed its overall delivery target in 1Q2016, the company fared well in Europe whereby it sold more units than its homegrown rivals in their backyard.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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