Months After $1,000 Deposit on Model 3, Tesla Buyers Antsy for Keys

(Bloomberg) —
Tesla Model 3
TheTesla Model 3 sedan (Courtesy of Tesla Motors via AP)

While his high-school classmates were blowing their money on Chipotle burritos and concert tickets, Truman Hale was saving up for a Tesla. In March of last year, after years of penny pinching, he plunked down a $1,000 deposit on a Model 3.

Now a 21-year-old student at Arizona State University, he’s eager for more information about what will be his first car, which he hopes will be delivered before graduating in December 2018. “I want to only own electric cars,” he said. “I’m riding a bike because I’m saving for this car.”

Hale is one of hundreds of thousands of Model 3 reservation holders in limbo, with deposits paid but little clarity about the status of their car — when they’ll get it, which options it’ll come with and what price they’ll ultimately pay. Many are hoping Tesla’s Chief Executive Officer Elon Musk will enlighten them at the handover party for the first 30 customers being webcast Friday.

The Model 3, a more accessible Tesla for those who can’t afford the Model S or X, has inspired fervor among electric-car enthusiasts and Musk fans. Priced at $35,000 before options or incentives, it will be Tesla’s least expensive vehicle yet, and excitement over its impending release has helped drive the Palo Alto, California-based carmaker’s shares up 60 percent this year. Still, the lack of information has some reservation holders getting antsy.

Tesla reported last spring that 373,000 people had placed deposits for the Model 3 and hasn’t given updated reservation figures since. Those who have put down deposits don’t know where they fall in the wait list or what month or year their new cars will be available. A Tesla spokesperson said more details will be released Friday and declined to comment further.

The lack of information received from Tesla “makes me 100 percent more nervous,” said Patrick Herrity, a 34-year-old business consultant in Virginia who made his Model 3 reservation online. He said he understands the company is being secretive to ward off competitors but hopes this week’s event will shed more light on his next ride.

What Herrity wants is a fully-loaded Model 3 with all-wheel drive and a sunroof — options that won’t be available in the first cars to roll off the assembly line in Fremont, California. Musk has said the Model 3 will initially be built with the simplest design, unlike the feature-heavy Model X sport utility, which was plagued by early production problems.

Additional options will come later, but Herrity said he doesn’t know whether they’ll be available by the time his number’s called. “I’ve been driving the 2009 Corolla that I bought out of college,” he said. “I want a fun, new car to drive.”

The longer reservation holders have to wait, the more expensive their cars may end up being. The U.S. begins to phase out the $7,500 federal tax credit buyers receive for purchasing electric cars once each manufacturer has sold 200,000 vehicles. Tesla likely will cross that threshold in 2018, according to Bloomberg New Energy Finance projections.

Tesla aims to produce 100 Model 3s in August and more than 1,500 in September, then ramp up to a targeted rate of 20,000 a month in December.

Some would-be Model 3 buyers may not be willing to wait. Hilary Bumgarner, who works for a technology company outside of Sacramento, California, said she is considering canceling her Model 3 reservation. She’s wants to see what the Model 3 would cost with her desired upgrades, and if she can’t get it by the end of the year, Bumgarner said she’ll instead buy a used Model S.

Musk has encouraged reservation holders to upgrade to the higher-priced Model S, rather than wait for a no-frills Model 3. In May, he told analysts that Tesla’s net reservations for the Model 3 “continue to climb week after week” and declined to give specifics.

Bumgarner said she thought she would receive notice about her spot in line but Tesla hasn’t delivered any news. “I’m somewhere in the first couple hundred thousand,” she said.

Other early Model 3 enthusiasts have already backed out. Cathy Gilabert, a 35-year-old veterinarian in Nevada, signed up for the newest Tesla in April 2016 before canceling six months ago upon realizing she didn’t like the car’s dashboard layout or how low to the ground it was. Already a Model S owner, she has her eye on a Model X for its extra room.

David Ventimiglia said he canceled his reservation not because of the car but due to Musk. The 45-year-old software engineer in San Francisco said he was bothered by the CEO’s participation on two of Donald Trump’s advisory councils and said Musk “made a big show out of stepping down” after the president pulled the U.S. out of the Paris climate accord.

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