Tesla is more than tripling the up front costs to order a Model 3 sedan – and this time it’s non-refundable. Drivers now have to lay down $3,500 immediately to secure their fully-electric vehicle, which is around 10% of its overall value.
Since its launch back in March 2016, Tesla had offered drivers in US and Canada the chance to secure their car for a $1,000 refundable deposit. That led to over 400,000 pre-orders, which looked tremendous to stockholders, but created a logistical nightmare for Tesla from which it is only beginning to emerge.
That had been followed by a $2,500 deposit when the order went through. That was months down the line for many buyers. However, now the reservation backlog has been cleared, Tesla is streamlining the process by asking for a non-refundable $3,500 up front.
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An undisclosed – but reportedly significant – number of Model 3 pre-order customers requested amid long production delays. Now some of the backlog of orders is being relieved by the overdue meeting production goals, Elon Musk’s firm is deciding to raise the entry level for its most affordable $35,000 vehicle, in the hopes of boosting cash reserves.
Tesla has burned through cash in recent years, but Musk has stated his intentions to make the groundbreaking company profitable as it spearheads the electric car revolution. In April, The Economist predicted the company would need to raise $3 billion in 2018 in order to survive.
“The Economist used to be boring, but smart with a wicked dry wit. Now it’s just boring (sigh). Tesla will be profitable & cash flow positive in Q3 & Q4, so obviously no need to raise money,” he tweeted back to the publication.
The influx of cash from those new $3,500 deposits will likely assist Tesla in the development of the semi-truck, pick-up truck, new Roadster and crossover SUV vehicles it has promised moving forward.
Note: A previous version of this article did not clarify that drivers had already followed the $1,000 refundable reservation deposit with an additional $2,500 down when they finally placed their order for a Model 3.
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