It was recently reported that nearly 25% of all reservations for the Tesla Model 3 have been refunded.
Apparently, Tesla has been paying out refunds faster than new Model 3 deposits have been coming in. This does not bode well for the future cash flow of the company.
Two years ago Tesla began accepting $1,000 deposits for its new, lower-priced Model 3 electric car, with the expectation that customers would likely receive their vehicles in 2018. Hundreds of thousands of people reserved one – including me.
I can understand the thought process here since it has been over 2 years and I still don’t know when I’m going to receive one. Many customers feeling the same way have been asking for their money back. After all, why wait for something you may have lost trust about?
Here’s a timeline showing the customer deposits since they began accepting pre-orders.
Perhaps the silver lining here is that the lesser amount of vehicles that require manufacturing will allow Tesla to hit their goals. If this means I will receive my Model 3 faster, I’m alright with this figure.
The chart below reveals the estimated percentage of refund requests as time has elapsed.
Here’s another diagram (from Recode) for good measure.
But who knows what this means for the customer? If you truly think about it, you may come to realize that anybody that was hyped enough to put $1,000 down for a Model 3 may have simply re-allocated the down payment to another Tesla vehicle. Even if that’s partially true, the higher priced Model S or Model X could yield more revenue for the company.
Or, of course, these customers have lost faith in Tesla and are looking elsewhere.
After a serious of online outbursts from Tesla’s Elon Musk, things look to be a little shaky right now. Nonetheless, at least Tesla is being open and honest about their recent failures. At the very least, they are demonstrating a commitment to giving customers their money back. In other words, if there is a potential cash flow issue created from that, it hasn’t crippled the company quite yet.
Even that act of goodwill could lead these refunds back to the car. Tesla just needs to prove they can deliver them on time first.