Musk: Tesla Selling $35K Model 3 Would ‘Lose Money and Die’

Elon Musk acknowledged Sunday that Tesla, at its current production rate, would “lose money and die” if it sold Model 3 mass-market sedans at the promised price of $35,000.

With production, 1st you need achieve target rate & then smooth out flow to achieve target cost. Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live.

— Elon Musk (@elonmusk) May 21, 2018

Despite Tesla’s Model 3 website still stating that it “achieves 220 miles of range while starting at only $35,000 before incentives;” CEO Elon Musk took to Twitter to acknowledge that the company would go bankrupt if it tried to ship starting price units before reaching a minimum production rate above 5,000 units per week.

Tesla began taking $1,000 reservations in March 2016 for its first mid-size all-electric-vehicle with a basic battery range of 215 miles. Within a week, the Tesla announced it had over 325,000 paid reservations. A year later, the number of paid Model 3 deposits indicated about 600,000 reservations.

Musk tweeted just before Tesla’s July 28, 2017 “Handover Party” for the first 30 Model 3 vehicles that he was confident the company would ship 80,000 vehicles by the end of 2017, and 500,000 in 2018. Musk laid out an exponential monthly production growth rate, ramping up from 100 units in August to 1,500 in September, adding: “Looks like we can reach 20,000 Model 3 cars per month in Dec.”

But Tesla has missed every Model 3 production target since the handover of the first 30 units. The highest production was an average of 2,000 Model 3 vehicles per week for a 3-week period, with a record of 2,270 vehicles for the first week in April.

Tesla’s stock price plunged by almost 6 percent after the company announced first quarter record revenue that also generated record losses. Musk indicated that the robot that builds Tesla vehicles had died. Musk responded by suspending production for a week in mid-May to restructure operations.

As Tesla approaches its first shipping anniversary, the Model 3 is now a luxury priced-vehicle, with the least expensive equipped unit available at $49,000. The company just introduced a new dual-motor Model 3 that does 0-60 mile-per-hour in 3.5 seconds, and has a battery charge range of 310 miles, and is super-luxury priced at $78,000.

It is unclear if Tesla can return to its production ramp-up schedule before losing significant numbers of reservations and deposit cash. Tesla has indicated the Model 3 reservations have fallen to about 400,000, but has emphasized the company had been purging so-called duplicate customer orders from the sales system.

Electrek did report over the weekend that new U.S. reservation “wait times” for the most popular rear-wheel drive, long-range battery version of the Model 3 has been slashed, from 12 to 18 months to a new wait time of just 4 to 6 months.