Tesla founder and CEO Elon Musk on Thursday (Wednesday US time) revealed that more than 10 per cent of orders for the new Model 3 had been cancelled, but numbers had jumped significantly since the company’s delivery of the first 30 vehicles last week.
Musk, in a conference call with analysts after releasing Tesla’s second quarter results, clarified remarks made last week that suggested that orders for Model 3 were above 500,000. Those were gross numbers, and including cancellations the order book stood at 455,000, but was growing at a net 1,800 a day since the launch.
Musk says he wasn’t too fussed by the numbers, saying there was more than enough to deliver in the meantime, and compared it to a hamburger stall – if you have one and a half hour wait for a burger, you don’t want to be taking more orders, he said.
Tesla won’t reach its peak production capacity of 10,000 a week until late 2018, when it will start delivering to international markets (right hand drive markets like Australia will see delivery in 2019).
“What we have ahead of us, of course, is an incredibly difficult production ramp,” Musk said. But he stressed there should be “zero” doubt of hitting the 10,000 mark next year.
“This is maybe the best I’ve ever felt about Tesla, to be frank,” Musk added. “Last week stressed the hell out of me.”
Tesla produced 25,708 vehicles in the second quarter, up 40 per cent from the same period a year earlier. It delivered just over 22,000 Model S and Model X vehicles for the quarter.
The company said it is actually seeing an increase in orders for its luxury Model S vehicles, despite the launch of a cheaper model.
Tesla said it had more than doubled sales in the latest quarter – to $US2.79 billion – and increased its losses by 37 per cent to $US401 million, which it blamed on costs associated with the ramp-up for the Model 3. It expects to make a margin of 25 per cent when the Model 3 is in full production.
Meanwhile, Musk said that Tesla solar roof installations had begun, at least with employees. (Employees also took the first 30 vehicles off the Model 3 production line).
Musk has a solar tile roof installed on his home, as does chief technology officer J.B. Straubel. “This is version one. I think this roof is going to look really knock-out as we just keep iterating,” Musk said.
Tesla began taking $US1,000 deposits for smooth black and textured-glass roof tiles on its online store in May, and Musk says inquiries at its EV stores were naturally veering towards questions about solar roofs, solar panels, and battery storage.
Solar tiles are expected to be available in Australia and other countries in 2018. Tesla says the solar tile will be cheaper than traditional shingles – the roofing most used in the US – with solar panels on top.
Tesla stock jumped 8 per cent in after hours trading following the earnings report, despite some analysts suggesting that Tesla needed to go to market to ease its cash burn. Musk rejected such suggestions, although he said a debt raising was a possibility.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.