Order a Tesla Model 3 Now, Take Delivery in 2 Years

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Last May, following an announcement that it would begin booking orders for its new, lower-priced Model 3, Tesla Motors Inc. (NASDAQ: TSLA) said it had received nearly 400,000 orders for the car, along with a $1,000 deposit with each order. The Model 3, with a list price of $35,000 before any federal or state incentives are applied, is scheduled to begin showing up in the driveways of those customers in late 2017.

The company has said nothing else about orders for the Model 3 since then — until Tuesday when Tesla changed the language on its Model 3 order page to indicate that production begins in late 2017 and that the delivery estimate for new orders is mid-2018 or later.

Our guess is much later. The company recently announced that it delivered 24,500 units in its third fiscal quarter, the most ever. Tesla delivered 15,800 Model S sedans and 8,700 Model X sport utility vehicles. Including another 5,500 units on their way to customers that the company doesn’t count until the cars reach their destination, that’s an average of 10,000 a month.

Even if only half of the 400,000 Model 3 orders are actually delivered, it would take Tesla nearly two years to build that many cars at a rate of 10,000 a month. And that’s if the production ramp goes from zero to 10,000 in a single month. How likely is that?

Tesla has applied to double the size of its Fremont, California, plant with the aim of building 500,000 cars annually by 2018. The company wants to expand the 4.5 million-square foot facility by 4.6 million square feet and raise the number of employees from around 6,200 to around 9,300.

Even if Tesla gets the go ahead to proceed with the expansion by the end of this month, adding a facility of 4.6 million square feet is going to take some time to build. Could it possibly be operational by late next year and ramped up to full production by early 2018? Possible, yes; likely?

Ford announced in April that it is building an assembly plant in Mexico in order to double its Mexican production and expects the plant to create 2,800 jobs by 2020. The company is believed to be moving production of its Focus and C-Max cars to the new plant beginning in 2018. Ultimately the plant is expected to produce 300,000 to 350,000 cars annually.

Of course Tesla hedges its delivery schedule with the words “or later,” and if history is any guide, if the company can deliver the Model 3 to rave reviews, a large portion of those 400,000 orders could be filled “later.”