The Future

The Tesla magic is gone

An corporate analyst estimated that almost a quarter of Tesla Model 3 orders may have been canceled. People who canceled their orders were driven by a variety of reasons.

The Future

24%
the estimated amount of cancellations out of all Tesla Model 3 orders, according to a Needham & Co. analyst
The Future

The Tesla magic is gone

An corporate analyst estimated that almost a quarter of Tesla Model 3 orders may have been canceled. People who canceled their orders were driven by a variety of reasons.

Rajvindra Gill, an analyst for corporate financial consulting firm Needham & Co., said that a grim 24 percent of all orders for the Tesla Model 3 — Tesla’s $35,000, “low-cost,” mid-size sedan electric car — have likely been cancelled, according to CNN. Gill also claims that since the rate of cancellations have accelerated in recent weeks, Tesla is refunding Model 3s at a higher rate than it’s receiving deposits. Elon Musk has disputed Gill's claims, stating that Tesla had 5000 net orders last week specifically. But for people that have canceled their order, it will take 60 days to get their refund.

There isn’t a single leading reason why people are deciding to cancel their Model 3 orders, but there’s a couple of possible explanations: the car felt like it wasn’t worth the wait anymore (the Tesla website promises a 1-3 month wait time, but the reported wait time allegedly ranges from four months to a year, to as late as 2020); the financial commitment made less and less sense in a rapidly diversifying electric vehicle space; seeing the final product in-person has underwhelmed more than a few customers who had been eagerly awaiting their purchase; and a handful have simply lost a taste for Musk as he continues to dig his own grave in unhinged social media posts.

But it seems the coverage of the conditions in Tesla factories exposed by outlets like Bloomberg has played at least a partial role in the steep cancellation rate. In order to keep up with sky-high production promises, Musk proudly slept in his own factory and provided workers free Redbull (leading to what some have called the hyper-caffeinated “Tesla Stare”). Model 3s have been produced in what are basically circus tents. Tesla has also sustained questionable factories for years. In 2015 and 2016, serious workplace injuries were much higher than those of its competitors. The company is being sued for racial bias and workplace abuse. Even with the promise of a $7,500 tax credit, the negative publicity surrounding conditions at Tesla aren’t exactly comforting to people making a gigantic financial investment.

Andrew Eklund, founder and CEO of advertising firm Ciceron, expressed on Twitter that he canceled his Model 3 order in favor of sticking it out with his current vehicle. “I have been waiting a long time, this is true,” Eklund said when contacted by The Outline via LinkedIn direct message. “Now, the tech is maturing and more and more car makers are launching electric vehicles so there are more options to consider. That's part of my decision.”

Other people who have cancelled their Model 3 orders have similar reservations. One person explained their reasons for cancelling their Model 3 order in a blog post (appropriately titled “Why I Cancelled My Tesla Model 3 Reservation”):

“There are already multiple battery electrics both on the U.S. and global market which are similar in cost, if not less, than the base Model 3,” she wrote. “They may not have the battery capacity of a featured Tesla, yet they are still true to the meaning of electric mobility. It would seem many people, perhaps too many, have truly forgotten this.”

However, Eklund told The Outline that he’s not ruling out Tesla as an option once his truck dies. “I know that Tesla will still be at the top of any list,” he said. And of course, Eklund is far from alone. Multiple people have characterized their Model 3 cancellations as reluctant decisions.

Vitaliy Katsenelson wrote for Contrarian Edge that he was underwhelmed by the general appearance of the Model 3 when he saw it in a showroom, a couple months after putting down a $1,000 deposit. “When you are in a showroom that has only the Model S and Model X on display, it is easy to imagine that the Model 3 is just a smaller version of the Model S,” Katsenelson wrote. “It is not.”

Unsurprisingly, still more cancellations have been from customers who were extremely turned off by Musk’s recent antics. Musk markets his projects largely on the merit of his public-facing persona: a big dreamer who wants to change the world for a better, a person who can accomplish the seemingly impossible when push comes to shove.

Recently, Musk baselessly accused Vernon Unsworth — one of the people who rescued the boys soccer team from Thailand trapped in a cave — of being a pedophile. (Unsworth threatened to sue, and Musk has since apologized.)

It was also revealed recently that Musk — who has historically donated to both Republicans and Democrats — is one of the top donors to Protect the House, a Super PAC with the express goal of keeping a GOP Congressional majority.

As pointed out by Motherboard, for a company that markets its vehicles as climate-friendly, low-emission “cars of the future,” it’s quite plainly hypocritical to donate heavily to a political party that supports oil-friendly policies and makes up almost all of the climate change deniers in Congress. For some people who chose to invest into Tesla’s self-described vision as an ethical car choice, this news was the last straw.

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