Tesla has brought in $180M (not $7.5B) on Model 3 pre-orders
Tesla just had an amazing 24 hours — both ahead of and following the unveiling of its mass-market Model 3.
However, the upstart EV automaker has not brought in as much cash as the company co-founder and CEO
Elon Musk wants you to think.On Friday morning, Musk tweeted that, based upon an average retail price of $42,000 for the Model 3, the company has effectively netted around $7.5 billion in a single day.
While Musk is a gifted entrepreneur, he has some problems with math on this one. Let's start with the deposit.
First off, Tesla did bring in a good chunk of cash: a fully refundable $1,000 for each pre-order, which was limited to two per person. That calculates to $180 million — nothing to sneeze at.
However, that's not the end of it.
Model 3 production isn't due to begin until late 2017 at the earliest. How many people are willing to wait that long? Moreover, how many people were really even interested in paying the full $35,000+ when it came to actually take delivery?
I suspect there's a good chunk of people who decided to part ways with $1,000 for a while so they could say they pre-ordered the Model 3. Tesla even tied its online pre-order page with the livestream of Thursday night's event. Although you didn't need to pony up the thousand bucks to watch, probably more than a few people thought you did (thinking they'd just cancel a bit later).
In this way, you can kind of think of the Model 3 as the most expensive Apple Watch ever.
But here's the real sticking point: Even if Tesla took 300,000 orders and brought in $300 million, that accounts, according to the Wall Street Journal, to just shy of two months worth of cash at the company's current spending rate.
So, really, this influx of cash, while promising, has done little to support Tesla long-term. It's going to need to produce the cars (and their inexpensive batteries at its Gigafactory) at a profit for many years to pull the company out of its financial troubles.
Regardless, Tesla and Musk have done something truly impressive: They got 115,000 people worldwide to put down money on a car they'd never seen or knew anything about. That alone has got to be worth something.