10 ms·

Reading the fine print of the reservations, I am a little surprised to see how non-binding the $1000 reservations are. A few tidbits: It can be canceled by you

Reading the fine print of the reservations, I am a little surprised to see how non-binding the $1000 reservations are. A few tidbits: It can be canceled by you (this is a good thing) or Tesla (not great...), it might be an input to your "order on the list", but the final order is only decided by Tesla, etc. If it can be canceled by anyone at any time for any reason, and doesn't necessarily bind your "place in line", what is the point of the $1000 reservation?

revelation 11y ago
Whats the point of signing a contract with Comcast? You can't sue, you are not guaranteed a service level, ... But in 95% of cases, it works out such that you have a slow but working internet connection. So even though you are not guaranteed a spot, chances are you will still get it sooner than someone who didn't reserve at all.
dtparr 11y ago
For those like me who didn't realize you could get to the reservation agreement by clicking to see the currency amount, it's accessible here: https://www.teslamotors.com/sites/default/files/pdfs/model_3_reservation_agreement.pdf https://www.teslamotors.com/sites/default/files/pdfs/model_3...
_ph_ 11y ago
I think its fair and clever that the order is non-binding and the deposit fully refundable. But requiring the deposit to place an order prevents or at least reduces any "fun" ordering or ordering for resale on ebay. Anyone seriously wanting to buy a Model3 should have little problem with the deposit.
ceejayoz 11y ago
I'd imagine they're just leaving legal wiggle room for "we bumped you down a spot so we could give the next car to a VIP".
- Someone1234 11y ago
  Or more likely "we bumped you down a spot (or removed you entirely) because you criticized us or our CEO on twitter." Anyone ordering this has to be careful what they say online about Tesla using their real name. Tesla has historically gone after critics pretty heavily (both professionals, and random members of the public). In particular if it is delayed and you call them out, expect to be removed.
  - true_religion 11y ago
    What random member of the public have they gone after?
    - Someone1234 11y ago
      Stewart Alsop. They were acting as a private individual who turned up at a Tesla event, it started late, they complained and got banned. Their job happens to be venture capitalist but they weren't acting in that capacity. The vehicle was private purchase for private use, and they complained on a personal twitter account.
      - soperj 11y ago
        And the guy has a history of being a douchebag. BMW did the same thing to him.
        Someone1234 11y ago
        > BMW did the same thing to him. Do you have a source on that? Considering how many BMW dealerships there are I am highly skeptical.
  - mikeash 11y ago
    As far as I know, they canceled exactly one person's reservation like this. Are there other instances, or are you extrapolating a bit too much?
jonknee 11y ago
> what is the point of the $1000 reservation? If you want a Model 3 the $1000 deposit is the fastest way to accomplish that goal.
- bhaak 11y ago
  Not exactly: "[...] the fastest way to buy a Model 3 is to buy a Model S or Model X." Existing customers will get priority. I have to say, I did lol when reading that but it makes sense to give a little goodie to your existing customers.
  - jonknee 11y ago
    Yes, but you will still need to make the $1000 deposit...
    - ljk 11y ago
      if you have a Model S or Model X $1000 is probably nothing
      - vsl 11y ago
        I wouldn't say "nothing" and it's less clear-cut when you lease, but if you have a Model S/X and want to buy Model 3 presumably as the 2nd car, yeah, pretty much.
  - vsl 11y ago
    Not exactly either. Tesla says that they'll roll out in US first (west coast to east), then EU & the rest of the world; priority will be given to more expensive configurations first and existing customers will only get priority within given price tier. Therefore, the fastest way to buy a Model S is to live in the US, immigrating as necessary, buy a Model S and order the most expensive Model 3 you can configure ;)
pkaye 11y ago
It is like a car rental reservation.
- hatsix 11y ago
  No rental car reservations (in the US)(that I know of) require a deposit...
  - praneshp 11y ago
    I think they do. They place a hold in your credit card. Years ago I got rejected at Hertz because the total amount + hold was greater my credit limit
  - iOsiris 11y ago
    It's called an "authorization hold" https://en.wikipedia.org/wiki/Authorization_hold https://en.wikipedia.org/wiki/Authorization_hold
    - hatsix 11y ago
      Right, that's once you have the car.... but not when you're making the reservation.
  - hentrep 11y ago
    Most rental car companies (Budget, Enterprise, Thrifty, etc) require a deposit which is held against your credit/debit card. It's typically >=$200, but they usually require a larger deposit if you use a debit card. I've been required to put down $400 in the past. They often don't make this deposit obvious, but you will definitely see it reflected in your card's account activity. Would genuinely love to hear about companies that don't require this deposit.
    - asavadatti 11y ago
      What you said is true after you rent the car. No rental car reservations in the US require a deposit while reserving a car.
pbreit 11y ago
To get in line and reserve a car.
mikeash 11y ago
The sooner you reserve, the sooner you get your car. If you don't like the terms then you can wait, but you'll get you car after the people willing to put money down right away.
- Avshalom 11y ago
  Part of op's point is that they explicitly don't guarantee that the sooner you reserve the sooner you get your car.
  - taneq 11y ago
    They want a list of people who've got cash to burn and who don't read the fine print?
  - Lawtonfogle 11y ago
    Reminds me of paying more for faster internet, yet the contract states they have to provide UP TO what ever speed. You can technically get less speed while paying more. Just another way companies write the contracts in their favor. It wouldn't surprise me if this becomes the norm in any 'place in line' list with high value items. Companies would love the ability to offer the chance to consumers to put a down payment for a place in line while at the same time removing any liability in case they have to break that agreement.
    - mikeash 11y ago
      Are there preorders where this isn't the norm? Whether you're camped out for the latest iPhone or preordering some hot new game, it's always understood that your place in line is a major factor in when you get your product but it's not a guarantee and the ordering isn't strict. I'm baffled at why anyone would think it should be otherwise. Guaranteeing a strict order would be essentially impossible, and it would mean that a problem with a single unit would delay the entire group of people behind it.
  - mikeash 11y ago
    I know. My point is that even if it's not guaranteed, it still works that way for the most part.
greglindahl 11y ago
Model S and Model X have/had the same terms.
cletusw 11y ago
I imagine that even with of the possibility of cancellations, the number of reservations is still a good proxy for interest. Using that they can set up their production lines without worrying too much about over- or under-investing in tooling. It'll probably be an even better metric this time since they can use the data from Model S and X cancellations.
vc98mvco 11y ago
To gauge the interest in the Model 3. The 1000$ is a large enough sum to dissuade non-serious buyers and thus get an accurate assessment.
paulsutter 11y ago
I made a $5000 reservation for the Model S long before it was available, and they told me a number that was my place in line, and that they'd contact me when it's my turn. I chose the color and everything. It's funny because they still haven't contacted me, nor did they contact anyone else I know who placed the reservation. Worked out fine for me, I've been mostly in Japan, and now that I'll be back in Seattle I'm planning to contact them and really curious what they say. Everyone else got their car eventually but had to call and check multiple times. To each person they apologized and said it must be an oversight. The whole thing leaves a really bad impression of the company. I wonder how they account for the money on their books over the past four years.
- beeboop 11y ago
  Almost assuredly it's a liability on their books, meaning they haven't recognized it as an income or asset.
  - sja 11y ago
    Just a quick technicality note: they would have it on their books as both an asset and a liability. The cash they received would be the asset, and the money owed back as a liability. Have to keep "assets = liabilities + equity" balanced!
    - beeboop 11y ago
      Thanks, been a long time since accounting classes.
- jacquesm 11y ago
  The Model S has been out for a long time now, it looks as if that's a pretty bad way to deal with downpayments. Here in nl the law is pretty strict about downpayments, if you accept a downpayment you have to keep the item in reserve for that particular customer. That's easy enough to check with a vehicle (they have a VIN after all). At a minimum you should get some compensation for financing them to the tune of $5K over a longer period of time.
ChuckMcM 11y ago
Well in the original Model S reservations they moved up folks who had bought the high margin ones to the front of the line so that they could show a profitable quarter early on. If you looked at their build orders for that first quarter or so it was waaaay slanted towards the more exotic versions. I would expect them to do the same for the Model 3. While it frontloads the profit, that can bootstrap the rest of the system.
- mikeash 11y ago
  They're doing the same for the Model X. P90DLs got priority, then P90Ds, and now I believe the 90Ds are starting to show up. 70D orders will probably be waiting until the second half of this year.
  - will_hughes 11y ago
    Grouping builds based on common configuration I don't see as being terribly odd - reduces the chance of errors and increases efficiencies. But that said - there's been 70Ds been showing up for a while, so I suspect it was just just done for the initial rush of orders.
    - mikeash 11y ago
      Do you mean S 70Ds? According to modelxtracker.com, no X 70Ds have been delivered yet. That's not a comprehensive list, but I'd expect to see some there if they've been making deliveries.
      - will_hughes 11y ago
        Ah, apologies - misread that as the Model S.

revelation 11y ago

Whats the point of signing a contract with Comcast? You can't sue, you are not guaranteed a service level, ... But in 95% of cases, it works out such that you have a slow but working internet connection. So even though you are not guaranteed a spot, chances are you will still get it sooner than someone who didn't reserve at all.

dtparr 11y ago

For those like me who didn't realize you could get to the reservation agreement by clicking to see the currency amount, it's accessible here: https://www.teslamotors.com/sites/default/files/pdfs/model_3_reservation_agreement.pdf https://www.teslamotors.com/sites/default/files/pdfs/model_3...

_ph_ 11y ago

I think its fair and clever that the order is non-binding and the deposit fully refundable. But requiring the deposit to place an order prevents or at least reduces any "fun" ordering or ordering for resale on ebay. Anyone seriously wanting to buy a Model3 should have little problem with the deposit.

ceejayoz 11y ago

I'd imagine they're just leaving legal wiggle room for "we bumped you down a spot so we could give the next car to a VIP".

Someone1234 11y ago
Or more likely "we bumped you down a spot (or removed you entirely) because you criticized us or our CEO on twitter." Anyone ordering this has to be careful what they say online about Tesla using their real name. Tesla has historically gone after critics pretty heavily (both professionals, and random members of the public). In particular if it is delayed and you call them out, expect to be removed.
- true_religion 11y ago
  What random member of the public have they gone after?
  - Someone1234 11y ago
    Stewart Alsop. They were acting as a private individual who turned up at a Tesla event, it started late, they complained and got banned. Their job happens to be venture capitalist but they weren't acting in that capacity. The vehicle was private purchase for private use, and they complained on a personal twitter account.
    - soperj 11y ago
      And the guy has a history of being a douchebag. BMW did the same thing to him.
      - Someone1234 11y ago
        > BMW did the same thing to him. Do you have a source on that? Considering how many BMW dealerships there are I am highly skeptical.
- mikeash 11y ago
  As far as I know, they canceled exactly one person's reservation like this. Are there other instances, or are you extrapolating a bit too much?

jonknee 11y ago

> what is the point of the $1000 reservation? If you want a Model 3 the $1000 deposit is the fastest way to accomplish that goal.

bhaak 11y ago
Not exactly: "[...] the fastest way to buy a Model 3 is to buy a Model S or Model X." Existing customers will get priority. I have to say, I did lol when reading that but it makes sense to give a little goodie to your existing customers.
- jonknee 11y ago
  Yes, but you will still need to make the $1000 deposit...
  - ljk 11y ago
    if you have a Model S or Model X $1000 is probably nothing
    - vsl 11y ago
      I wouldn't say "nothing" and it's less clear-cut when you lease, but if you have a Model S/X and want to buy Model 3 presumably as the 2nd car, yeah, pretty much.
- vsl 11y ago
  Not exactly either. Tesla says that they'll roll out in US first (west coast to east), then EU & the rest of the world; priority will be given to more expensive configurations first and existing customers will only get priority within given price tier. Therefore, the fastest way to buy a Model S is to live in the US, immigrating as necessary, buy a Model S and order the most expensive Model 3 you can configure ;)

pkaye 11y ago

It is like a car rental reservation.

hatsix 11y ago
No rental car reservations (in the US)(that I know of) require a deposit...
- praneshp 11y ago
  I think they do. They place a hold in your credit card. Years ago I got rejected at Hertz because the total amount + hold was greater my credit limit
- iOsiris 11y ago
  It's called an "authorization hold" https://en.wikipedia.org/wiki/Authorization_hold https://en.wikipedia.org/wiki/Authorization_hold
  - hatsix 11y ago
    Right, that's once you have the car.... but not when you're making the reservation.
- hentrep 11y ago
  Most rental car companies (Budget, Enterprise, Thrifty, etc) require a deposit which is held against your credit/debit card. It's typically >=$200, but they usually require a larger deposit if you use a debit card. I've been required to put down $400 in the past. They often don't make this deposit obvious, but you will definitely see it reflected in your card's account activity. Would genuinely love to hear about companies that don't require this deposit.
  - asavadatti 11y ago
    What you said is true after you rent the car. No rental car reservations in the US require a deposit while reserving a car.

pbreit 11y ago

To get in line and reserve a car.

mikeash 11y ago

The sooner you reserve, the sooner you get your car. If you don't like the terms then you can wait, but you'll get you car after the people willing to put money down right away.

Avshalom 11y ago
Part of op's point is that they explicitly don't guarantee that the sooner you reserve the sooner you get your car.
- taneq 11y ago
  They want a list of people who've got cash to burn and who don't read the fine print?
- Lawtonfogle 11y ago
  Reminds me of paying more for faster internet, yet the contract states they have to provide UP TO what ever speed. You can technically get less speed while paying more. Just another way companies write the contracts in their favor. It wouldn't surprise me if this becomes the norm in any 'place in line' list with high value items. Companies would love the ability to offer the chance to consumers to put a down payment for a place in line while at the same time removing any liability in case they have to break that agreement.
  - mikeash 11y ago
    Are there preorders where this isn't the norm? Whether you're camped out for the latest iPhone or preordering some hot new game, it's always understood that your place in line is a major factor in when you get your product but it's not a guarantee and the ordering isn't strict. I'm baffled at why anyone would think it should be otherwise. Guaranteeing a strict order would be essentially impossible, and it would mean that a problem with a single unit would delay the entire group of people behind it.
- mikeash 11y ago
  I know. My point is that even if it's not guaranteed, it still works that way for the most part.

greglindahl 11y ago

Model S and Model X have/had the same terms.

cletusw 11y ago

I imagine that even with of the possibility of cancellations, the number of reservations is still a good proxy for interest. Using that they can set up their production lines without worrying too much about over- or under-investing in tooling. It'll probably be an even better metric this time since they can use the data from Model S and X cancellations.

vc98mvco 11y ago

To gauge the interest in the Model 3. The 1000$ is a large enough sum to dissuade non-serious buyers and thus get an accurate assessment.

paulsutter 11y ago

I made a $5000 reservation for the Model S long before it was available, and they told me a number that was my place in line, and that they'd contact me when it's my turn. I chose the color and everything. It's funny because they still haven't contacted me, nor did they contact anyone else I know who placed the reservation. Worked out fine for me, I've been mostly in Japan, and now that I'll be back in Seattle I'm planning to contact them and really curious what they say. Everyone else got their car eventually but had to call and check multiple times. To each person they apologized and said it must be an oversight. The whole thing leaves a really bad impression of the company. I wonder how they account for the money on their books over the past four years.

beeboop 11y ago
Almost assuredly it's a liability on their books, meaning they haven't recognized it as an income or asset.
- sja 11y ago
  Just a quick technicality note: they would have it on their books as both an asset and a liability. The cash they received would be the asset, and the money owed back as a liability. Have to keep "assets = liabilities + equity" balanced!
  - beeboop 11y ago
    Thanks, been a long time since accounting classes.
jacquesm 11y ago
The Model S has been out for a long time now, it looks as if that's a pretty bad way to deal with downpayments. Here in nl the law is pretty strict about downpayments, if you accept a downpayment you have to keep the item in reserve for that particular customer. That's easy enough to check with a vehicle (they have a VIN after all). At a minimum you should get some compensation for financing them to the tune of $5K over a longer period of time.

ChuckMcM 11y ago

Well in the original Model S reservations they moved up folks who had bought the high margin ones to the front of the line so that they could show a profitable quarter early on. If you looked at their build orders for that first quarter or so it was waaaay slanted towards the more exotic versions. I would expect them to do the same for the Model 3. While it frontloads the profit, that can bootstrap the rest of the system.

mikeash 11y ago
They're doing the same for the Model X. P90DLs got priority, then P90Ds, and now I believe the 90Ds are starting to show up. 70D orders will probably be waiting until the second half of this year.
- will_hughes 11y ago
  Grouping builds based on common configuration I don't see as being terribly odd - reduces the chance of errors and increases efficiencies. But that said - there's been 70Ds been showing up for a while, so I suspect it was just just done for the initial rush of orders.
  - mikeash 11y ago
    Do you mean S 70Ds? According to modelxtracker.com, no X 70Ds have been delivered yet. That's not a comprehensive list, but I'd expect to see some there if they've been making deliveries.
    - will_hughes 11y ago
      Ah, apologies - misread that as the Model S.