Help me understand the high (reported) cancellation numbers...

Help me understand the high (reported) cancellation numbers...

I'm math guy. It's how I approach everything. Actually, let me back up and first say that I am NOT trying to imply in this post that people shouldn't be negative, have concerns, etc. This is NOT ANOTHER POST to say "You're dumb if you cancel" - it's truly me, trying to ask you, to help me understand what is happening. Because I don't.

It is now being reported that as many as 25% of original (U.S.??) reservation holders have requested cancellation. Let's be conservative and say that is closer to 20%. Because it doesn't really matter for my questions, so we'll low-ball it. I don't understand why. Are there perhaps some people who feel the SR won't ever happen? Sure, but not 20%. Are there people who have decided to get another vehicle or simply never get this one? Sure, but not 20% of the original line. Are there people whose financial situations have changed or feel they can no longer justify the Model 3? Again, yes, of course.. but not 20%. I would totally understand if ULTIMATELY 20% of people decided not to get it... but that's AFTER the car is announced, prices are disclosed, etc.

I placed my deposit, like the vast majority of these 20%, back in April of 2016. I can safely assume the vast majority because we always have glimpses into when orders showed up, and that's honestly when the vast majority were placed. It is hard to imagine that anything more than 2 or 3 percent of that group of people suddenly need their $1000 back urgently... which makes me wonder why you wouldn't just leave it on the line until your invite arrives. THEN you make the decision, but at least you hold your spot.

The ONLY thing that comes to mind is maybe it became an emotional decision for many out of anger on timing, pricing, whatever - so maybe it's just that - but I don't get it. Otherwise, maybe the TIMELINE of drops isn't being accurately reported and the 20% (25%) represents "since day 1" drops? That would make a bit more sense to me, but still not even really.

spuzzz123 | June 5, 2018

When I reserved I was certainly unsure. Line waiter never saw it. Wasn’t truly convinced after reveal. Only made my decision final after sitting in one in the showroom in March 2018. So those numbers don’t surprise or concern me at all and I’m sure tesla management didn’t expect a 90% conversion rate either.

mos6507 | June 5, 2018

This is why Elon was annoyed and tried to brush off questions related to reservations.

Kathy Applebaum | June 5, 2018

Tesla's numbers from last year show they're expecting a 50% cancellation rate. So 25% is just a shrug of the shoulders.

In the small sample size of people I personally know who have cancelled, two were never serious about getting the car and the rest have had life changes in the past two years -- finances have changed, they needed a car in the mean time, family needs have changed.

gmkellogg | June 5, 2018

I've spoken to a lot of people who have cancelled because they just couldn't wait for a new car. They were on a lease and had to get a new car. I also know people who cancelled because they bought a Model S.

There are also people who cancelled because they were expecting a Model S.

ReD eXiLe ms us | June 5, 2018

Before the Model S was released Edward Niedermier 'reported' that 90% of Reservation holders canceled their orders for it. Tesla said they had around 10,000 Reservations when Model S launched. They Delivered about 2,500+ of them in the first six months, then announced they had 13,000 outstanding Reservations.

When the Model 3 was Unveiled, Anton Wahlman claimed to have made 20 Reservations himself, and intimated that Tesla Cultists may have done the same in order to artificially inflate the apparent popularity of Model 3. Tesla examined the records of Reservations made and determined that less than 5% of people had ordered more than one Model 3 and that only 0.2% of orders placed were for more than two Model 3 per person ordering. They canceled the excess orders beyond two units per person.

There are those who have been reporting doom, gloom, deception, and imminent failure for Tesla for years. They have been proven wrong time and again.

doelcm | June 5, 2018

"This is why Elon was annoyed and tried to brush off questions related to reservations."

Agreed. And he was annoyed because the answer is complicated. People cancel for many reasons (most already covered here). I considered canceling myself (but didn't). Even in my case, the reasons I considered it were complicated. No short answer would do the question justice. A long, nuanced answer from Musk wouldn't be satisfactory either. People would just listen until they heard the part that fit their own agendas, and they would ignore the rest. See the way people take Musk's tweet about why the SR base model isn't being manufactured now, and claim it means Musk doesn't think it can't ever profitably be made.

xad | June 5, 2018

@doelcm +1

SamO | June 5, 2018

Net reservations still above 450,000 . . .so I don't think Elon gives a fig about your stupid cancellation FUD.

jjgunn | June 5, 2018


July 1st - Sept 30 will tell the real story.

They ain't stockpiling M3's in massive parking lots in the "hope" they will sell.

Wait & see....

SO | June 5, 2018

@phil - in the article that frank provided, it states the following: “The company says it still has 450,000 reservations on its books. ”

Rocky_H | June 5, 2018

Thank you for the links, all, to TeslaMotorsClub forum and Yahoo. But going through them, they are referring to a company called Second Measure. So I traced back through the links to Second Measure's report:

I was trying to find how they came up with this figure of "a quarter" of the reservations had cancelled. It turns out...they made it up. The real data they have does show a 12% cancellation rate from a Tesla quarterly call August 2017. Second Measure thinks it is higher since then, so they just say "a quarter"! WTF?!

Frank99 | June 5, 2018

Rocky, don't confuse us with facts!

cascadiadesign | June 5, 2018

Sounds like Second Measure needs to change their name to Second Guessing.

M3NOICE | June 5, 2018

One day last year I talked to my neighbor about his solar. He said that he installed solar because he put a reservation for a Model 3 on March 31st. I said, Holy crap, me too! Having two Model 3's in adjacent driveways... Anyway, a few weeks ago I asked him if he configured (I haven't seen an M3 in his driveway) and he said that he bought a new truck earlier this year and will get married later this year. The model 3 was no longer in the books. The point is that he was very serious as he over sized his solar, but life happens and plans change.

phil | June 5, 2018

SO | June 5, 2018 @phil - in the article that frank provided, it states the following: “The company says it still has 450,000 reservations on its books. ”

I see that. Tesla did say that net reservations were over 450k as of March 31, but has provided no more recent numbers. The data analyst claims the reservation count started declining significantly in January, and the decline accelerated substantially in April. Now we're in June. It will be interesting to see what Tesla says next time.

vmulla | June 5, 2018

Reservation/Cancellation numbers mean little as long as their demand outweighs supply. And just when the demand/supply balance starts tipping we have options/fed-credit/margins/tweets/reveals game to play.

The M3 is an extremely good car, but its not a car for everyone and that's OK.

jindhal | June 5, 2018

I think the primary reason being delays, I almost cancelled my reservation when the last delay was announced for June deliveries. I crossed my fingers and hoped I would not be getting one of those.
I would have definitely cancelled if I did.

Elusivejeep | June 5, 2018

years ago when i stood in line they asked me if i wanted to reserve 2 cars at $1000 per reservation. I was under the impression that the car would be 35k so I said "why not, it's refundable anyway." The first car I got was just over $60k, not 35 so now the second one will likely be cancelled. I could have bought 2 cars for 70k or possibly 50k after rebates but in reality they are(or at least have been) almost twice that much.
I absolutely could not wait for the 35k car. I needed a car probably 2 years ago.
So now I like the car I got a lot, but there is now no way I can swing another one.

bpaul | June 5, 2018

Second Measure has anonymized credit card data.

"Due to strict confidentiality agreements, Second Measure can't say exactly where it receives its data from, but says it works with a massive quantity of anonymized consumer spending data, and that this data makes up a representative selection of 2-3% of all credit card transactions."

So, they seem to have a sufficient sample of credit card transactions to draw inferences about the entire population. They nailed their forecast last time. I'd say any hunches I have wouldn't be enough to overcome the actual, real data presented to us here. Particularly since what they are reporting seems so reasonable!

Effopec | June 5, 2018

Am I the only one that thinks 25% is really low for a 2+ year wait for a product many had never seen when reserving? There are many reasons for people to cancel, and almost none have to do with the quality of the product itself. Personally, I just reserved this past February. I want the car, but I have a 2014 with under 40k miles now, so I don't need the car. My Daughter starts college next year and is looking at $70k/yr private schools. Then I have another 2 years behind her. I want the car. But I still may do the fiscally conservative thing and cancel.

bpaul | June 5, 2018

To clarify, of all reservations made between March 2016 and April 2018:
* 23% have canceled.
* 8% have converted their reservation to an order of a Tesla, be it a 3, S, or X.
* 69% continue to wait.

Once the backlog of reservations clears, we'll see what the final take rate for reservations winds up being. People are right that this doesn't really matter, so long as demand remains strong, unless you're wondering how long until you get your invite. Then, the take rate matters a lot!

SUN 2 DRV | June 5, 2018

SamO +1 "Net reservations still above 450,000 . . .so I don't think Elon gives a fig about the stupid cancellation FUD."

Yes exactly! The cancelation rate will be offset by some number of new reservations. And it's amazing that the net number of reservations is staying as high as it is because there's absolutely no current demand generation effort. There are still very few Model 3s in showrooms, no test drives, at least a 4-6 month waiting list for new reservations, and yet it seems that as many people are making new reservations as are canceling.

Just imagine what will happen when the lead time shortens and they start to offer test drives!!!

1scallawag | June 5, 2018

brian wrote... "it's truly me, trying to ask you, to help me understand what is happening. Because I don't."

I think I understand. 4/1/16 I put a deposit down because is no real money. Now I'm thinking about canceling my order because of the wind noise issue!!! I know I know everyone is going to say there's no wind noise issue but I personally haven't heard that about MS or MX so I may go with a MS or MX or even god fobid the E Pace. It's certainly not hard for me to understand why people would cancel when There is a 25% chance I will!

Kathy Applebaum | June 5, 2018

"there's absolutely no current demand generation effort."

Except the demand generated by those of us who show our cars to other people. :)

JH89 | June 5, 2018

I still haven't canceled...waiting to see what the math looks like when I can finally buy what I want.

But I'm fortunate that I have the means to wait. I just threw $2k into repairs on the car I'm more than ready to get rid of. Frustrating, but I have that luxury. Others don't.

charles.a.braun | June 5, 2018

We cancelled one of our Model 3 orders (Online reveal night) when we purchased our S 2 months later.

We kept our Wait In Line reservation.

Rocky_H | June 5, 2018

@Kathy Applebaum, Quote: "Except the demand generated by those of us who show our cars to other people. :)"

Heh, yes, I just went for lunch today with a potential buyer to talk about the ownership experience. He said a couple of times, "This was very good...and very bad for me." So I think he's locked in.

greg | June 5, 2018

"Question...For the number of reservations that cancelled, does it include people that cancelled to buy a model S or X?"

Depends - but only if these people used EXACTLY the same credit card [number] to pay for the configuration of their model X or S. that they used to make the deposit for the Model 3 back in 2016 or whenever.

If they used different cards [or more than 1 card i.e. split payments over 2 or more cards] or paid the configuration amount some another way then they will still be counted as having a reservation for a Model 3 according to how I interpret how Second Measure say they "calculated" their numbers.

A 2-3% [anonymised] sample of the credit card transactions that Second Measure supposedly get is possible to give statistically relevant answers. But only if it is truly representative enough of the entire spending patterns of the wider population of the US as a whole. A that is what lets them to reliably draw many of their conclusions from.

We don't know how representative of the wider spending patterns their 2-3% really is, we have to take their word for it that they are sampling properly and that their data provider(s) are also sampling the date representatively enough for them before they get it. Ten you also needs to consider that their data only captures credit card spending in a way that lets you link transactions to "people" in some way via the anonymised credit card # as other types e.g. cash transactions] won't offer any traceability or linking of sales to a single [anonymous - you hope!] "person" that credit cards will.

In the case of Model 3 cancellations and configuration numbers - their conclusions are speculative. Their process of determining these things rests on some rocky assumptions. In effect for Model 3 changes they are simply using the monetary value of the transaction and whether its a credit or debit to determine "Model 3" reservations and cancellations. Which is about all you can do with that data. Knowing its a model 3 reservation 'cos its a $1000 payment to Tesla is knowable, knowing its a cancellation 'cos its a $1000 payment to the credit card holder by Tesla is also knowable.

Knowing someone has configured cos they then paid $2500 "more" to Tesla is also knowable, if that is made as one payment, make it as 2 payments of $1000 and $1500 or some other way and it looks like a new reservation and something else. Not a reservation converting to an order.

Make that configuration payment on another card from the deposit and SM can't reliably know what that really means..
They can't tell if thats a completely new custom order for a X or S from someone or a previous Model 3 reservation being converted to a Model S or X order. They know its a payment to Tesla for a configuration payment thats all.

All up for Tesla Model 3 "sales" patterns, its better than Wild Assed Guesses, but not really that much better.

Agree that this technique does give a [near real time] view into *changes* in spending patterns [which is their acknowledged forte e.g. Chipotle has a problem, which competitors apparently benefit], but to draw conclusions from say 1, 2 or even 4 months worth of a few folks Tesla credit card spending patterns and then say whoops Model 3 cancellations are now heading through the floor and conversions to orders are only X% are likely irrelevant in the wider scheme of things here when for nearly a year Tesla has publicly stated it has over 2 years of pent up demand and they are only talking about changes in the most recent few months.

Shock | June 5, 2018

My decision to cancel was because I realized there was no way I'd get the car I wanted at the price I expected, and also I no longer wanted to be part of the shenanigan of the ramp up and incessant disinterest in building a $35k car. A few think I never had a reservation (I have pics to prove I did). A few think I couldn't afford it (though my income has gone up by more than a model s lease since I reserved last summer). Simply put I just lost sight of the dream, lost the faith.

hpn | June 5, 2018

Let's wait to see the real cancellation numbers will be for the people that will not benefit from the full federal rebate.....$7500.00. I bet a lot will cancel if they won't have their car at the end of that "full rebate" quarter.

ravisundaramam | June 5, 2018

@hpn : My guess: On 2019 Jan 1, tax rebate drops by 3750$ and Model 3 base price will be reduced by 2000$. On Jul 1 2019, tax cut becomes 1875$ and price would be 32,000$. On Jan 1 2020, tax cut goes away, and Tesla would be priced at 31K.

Just my guess.,

dgstan | June 5, 2018

The reservation numbers absolutely mean something. It is an estimate of future income for Tesla. To say Elon doesn't care or that as long as demand outstrips supply, it's ok, is not realistic.

Now, I personally can't say whether these numbers are accurate or if they are more or less than previous models. I also can't say if these figures are good or bad, but the people who know, certainly care a great deal.

plunderfest | June 5, 2018

I can certainly post my frustrations. I have no intention of cancelling, but as a line waiter I can tell you I feel this experience was a bit of a bait n switch for me. When announced I expected a 35,000.00 car with options. What I didn’t expect was the top out version of the cars options to be over 40,000.00 worth of options. It’s a big kick in the gut.

Grant you I don’t need the full on “P” version... would looove it....but the AWD long range version of the car is my ideal car.

Which, is still 25,000.00 in options over listing price.

I’m an average person working an average wage and fully in support of the tesla dream. I’m gonna struggle to figure out my car payments.

Before I get told I shouldn’t be buying a car I can’t afford.... my response will be “shame on you, I was the target market, and now I feel the car is right at a painful level of almost out of reach”

I paid my 1,000.00. In support and I’m waiting quite patiently with the rest of you while I file away savings, and pray miracles happen so I can afford my next dream car.

If any of you rich and powerful people wish to help me out, I promise you I won’t complain.

Just my 2 cents.

35k is affordable to the average customer.
50-60k is rough
80k+ is not..... and it sucks to think you can’t afford something your originally thought you could.

greg | June 5, 2018

We understand how you feel, but your SR Model 3 is still planned and will ship with some tax credit.
Some of us are going to be waiting long after you to get yours. And we reserved the same day as you.

Based on what Elon said today at sotkc holders meeting, configuration invites for Model 3 SR in Q4 this year and Delivery of SR model 3's will start in Q1 2019.

So if thats the case you can expect $3750 in Tax credits if you take delivery up until end of Q2 2019.
[half that if not delivered later but before end of 2019].

Assuming you can actually use that tax credit fully, then that will mean your actual cost after rebates will be $35,000+$1,000 delivery charge less $3,750 credit = $32,250

Thats less than the $35,000 price. and you won't be able to add too many options [but at least a colour choice and maybe 19 inch wheels] to that. But it will still be under the base $35K price you expected to pay.

Of course sales tax may need to be allowed for depending on where you live that would be the same for any new $35K car you buy. EV or not. But you might qualify for a local EV rebate in any case.

So, yes Christmas is delayed for you, but it is still coming. And you won't get a lump of coal when it does.

Meanwhile, start some tax planning to ensure you can use your likely federal tax credit to its full assuming 2019 delivery. Your local CPA can assist with that aspect.

gballant4570 | June 5, 2018

That is why the base model 3 is important. To really penetrate beyond the 15% into the 85%, including the used car market.
I went to the DC showroom today. I thought I might cancel, to go instead for a model S - used, to stay in the same price range. After comparing 3 and S, I am not going to cancel. I just have to talk my wife out of the S.

dgstan | June 5, 2018

> Based on what Elon said today...

Seriously, can you believe any timeline he gives at this point?

MSteg | June 5, 2018

Simple math. SR without federal tax credit and state rebate is increase in price by >$15K in after tax money. Style is the one thing that sells the car not predicted reliability. How much is someone waiting for an SR willing to pay extra for style with the tax credit and rebates gone. Reliability, I already know one person whose M3 is not working because they can't get a repair part. It makes a person anxious to buy a car that may not be able to be driven for weeks or months depending on what breaks or is broken in an accident. I still hold a 1st day early reservation with the SR M3 in mind. I don't need to spend an extra $15K on a car for a range and leather interior I don't need. I already have a Bolt with the non-black premium interior which was $11K less than LR model with premium black only interior I could have ordered 2 months ago. My Bolt has been getting around a 250 mile range. Is 60 more miles range for the LR M3 worth $11K and how is is style worth. There will be the dedicated Tesla fans that will want that but for others $15K after tax money turns into a full house solar installation and no electric utility costs for the next 20 years. I understand why Tesla made the decisions to sell the high ends first (cash flow) but will the AWD deliveries make up for the loss in SR reservations. Of course if you can't make the SR version profitably there won't be one. You might ask long can you string someone along. Right now the people with early reservations with the SR in mind it will be approaching 3 years before they may get their car based on today's announcement. I will continue to hold my reservation but the moment it hits the line between delivery and loss of tax and rebates it is over.

greg | June 5, 2018


*You* don't have to believe what he says, but Tesla is still achieving the production and delivery milestones - that he said they would - even if they're not exactly right on the time he said, or in the exact same order he originally said.

Even if he's 10 or 11 months wrong with when SR model 3's start to ship, which is way more pessimistic an estimate than for when LR Model 3s would be available to "non owners".

As such it means:
(a) Model 3 SRs are still coming and (b) such buyers will get a tax credit when they do.

Model 3 SR is clearly not the vapourware or bait and switch product that many FUDsters and naysayers round here and elsewhere say it is. And yes it is going to have a tax credit. Maybe not the full tax credit, but still a tax credit.

The main hold up with SR Model 3's has been the Gigafactory-1 ability to make enough smaller battery packs fast enough and cheaply enough. Clearly they are not at that level yet and need all the long Range battery packs that they can make right now. Which is delaying when SR battery packs start being made.

Meantime if Congress got off their arse and extended the tax credit beyond 200,000 cars per manufacturer as their being lobbied to do then there'd be no discussion on that point either.

Even if they don't extend it and some miss out on the tax credit, then the sole reason why Model 3 SRs are likely getting less than a full tax credit is simply that Telsa has been too good at making and selling Model S's and X's in the 2 years since the 3 was revealed. If their sales of those products had been lower in the last 2 years [or more or less as Tesla planned them to be] then the tax credit would probably be on track to last until well into 2020.

Of course lower S and X sales might have meant Tesla might have gone broke in the meantime too. Meaning no Model 3's for anyone.

I'd rather take the less than perfect present situation in my hand now, than any number of perfectly promised and executed but impossible to obtain futures out there in the wild.

Your opinion on that may differ.

jeff.tapia | June 5, 2018

25% cancellations shouldn't be that odd to anyone.
We reserved these over 2 years ago.
A lot in life has changed - new drivers, replacement cars, etc.
I cancelled because in 2 years I HAD to buy too many cars and now I don't need another for a long time (hopefully).

The was exciting but I don't need another a car anymore - simple.
I got my refund CHECK for the full amount, no deduction for original CREDIT CARD PROCESSING, within 5 days (3 business days).

I'm not slighting the early refund request that seemed terrible from what I see here.

I'm out of the car market. I cancelled and will be back in 5 or 10 years.

Decision time has come around and after 2+ years - it is not AT ALL surprising that 25% have new and different priorities.

Chucking a grand into savings until next time...

SUN 2 DRV | June 5, 2018

"SR without federal tax credit and state rebate is increase in price by >$15K in after tax money."

Please show your assumptions and math...

ravisundaramam | June 5, 2018


I feel for you, and wish you the best. I want you, and millions more like you, to get a base model 3.

I dont need the LR, my commute is 8 miles one way. If any ICE dealer pushes "premium interior" for $4000 or an ICE car maker bundles the heated seat I want with moon roof and 2000 W stereo I would laugh at them. You should not buy these overpriced options.

Still I ponied up the money and bought the first production. Paid for options and bundles that I would normally object. It is my bit to help Tesla reach the goal of delivering a moderately priced EV. I like the car I got, but if Tesla does not deliver the base model car you and millions like you want/need I would be disappointed and feel I have been robbed.

I wish Tesla could say "all Day 1 people get the car they want in 2018, even if it is base model". But I don't know the real cost and real debt Tesla is straining under.

jpmccormick4 | June 5, 2018

For me it was the wait time and getting the wife on board. We ended up buying her a new car, so I cancelled my reservation for the time being. I plan on resubmitting one in another 6 months or so though. A car is a big purchase and typically the timing is important to make it work. I imagine many people want to purchase a vehicle in a specific time frame and I don't believe the cancellations are any indication of future sales, but more people realigning their purchase timelines.

pierpont | June 5, 2018

i have two friends who both are sitting on reservations with no intentions of ever using them. One cannot afford the high price, the other doesn't like the car. he is interested in allowing me to purchase it, claim the tax incentives, other reimbursements, and then split any profit. so there's a motive there. i have no idea if this is feasible or not.

mos6507 | June 5, 2018

When you cancel there is a textbox where you can explain why, so Tesla does have the ability to report the reasons why. They're just not being forthcoming, which suggests it's not pretty.

dgstan | June 5, 2018

Greg, you can't say Tesla is hitting their milestones if they are months late. If they say they're going to make 5000 cars a month by April 1st, and then they don't achieve that, it is - by definition - a missed milestone. Of course, they can make new milestones and new ones after that. Eventually, they'll meet one. But, that doesn't excuse the ones they missed.

So, if you want to say that Tesla met their production milestone after revising it three times, I would say that is closer to the truth.

msmith55 | June 5, 2018

Competition has been trying to catch up with Tesla's model 3, And are struggling to provide the same features at a lower cost, and have convinced about 1/4 that they have, but in reality, almost all features are inferior to Tesla, but they are close enough to fool many to cancel... they really need to get repair cost down, that is their weakest feature, and they need to upgrade features on a regular basis, to improve quality and value. So far they are just struggling to get the product out the door, and not showing improvements to EAP which is needed, and blind spot monitoring, etc.

ehsmadhatter | June 5, 2018

My situation is a lot larger, I was one of 10 teachers that reserved day 1 at my school 2 years ago.
Today I am the only one who is driving a Tesla to school. Most dropped after the first year, then a few more this last moving of the goal posts. I was going to cancel during spring break, when all of a sudden I got the invite!

mos6507 | June 5, 2018

Early on, it was a status symbol to have a reservation. But now with the car out the hype cycle is being deflated by alcantaragate, phantomtouchgate, panelgapsgate, scratched-during-transit-gate, cracked-windshield-gate, and most recently, brake-gate. So the word of mouth right now is decidedly mixed. Depending on who you talk to, either people will still be excited to say you're a reservist or they'll cock their head to the side and say "haven't you heard about (insider -gate issue)". If the idea behind standing in line that first day was to be the first person on your block to drive the car and get lots of attention, then that phenomenon is really deflating. I know the car has a lot of mindshare one way or another, but not all of it is positive anymore. I do think this social aspect drives a lot of the cancellations even if the person himself isn't worried about a -gate issue.

accentcreate | June 6, 2018

Queued and reserved 31 March 2016, still waiting even though that was while most of the USA was fast asleep or watching TV on the evening of 30 March.
The more cancellations the better for us as it might bring forward the date for international reservers to configure.
If it takes much longer I may have to cancel because I'll be too old to enjoy the full capabilities of the M3.
No point mentioning MS or MX because they are just too damned big for our roads and villages.

dd.micsol | June 6, 2018

@accent-just wait for compact design-it's coming in 2023 if size is such a big issue-move to another country.