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takyon writes:

Tesla has received 325,000 preorders in the first week for its Model 3 electric car. The starting price of the car is $35,000, and preorders cost $1,000. However, those preorders are refundable, and the company has faced delays for previous vehicles, leading to skepticism about the company's ambitions:

Especially at a time when the automobile seems to be slouching toward commodification, the sight of Tesla fans lining up at stores across the world hoping to put down deposits on a car they had never seen before was nothing short of mind-blowing. But as stunning as this feat of stunt salesmanship was, it was just that: Tesla has not actually sold any Model 3s and there are a wide range of reasons for believing that these pre-order eggs will not hatch into the chickens that Tesla is already counting. In fact, there are reasons to suggest that the entire pre-order play is all a gambit designed to boost the company's stock ahead of a much-needed return to capital markets.

The article goes on to point out Tesla's troubles in China, where speculators placed huge amounts of orders and inflated the actual demand.

[...] With the launch of Tesla's most ambitious vehicle, the Model 3, the risk of overestimating demand is once again real. Indeed, everything about the Model 3 pre-order program seems calculated to delude the company about the market's actual demand for the car. At $1,000, the deposit is less than 3 percent of the base model's $35,000 projected price, and far less of a financial commitment than the $5,000 Tesla demanded for reservations of its Model S and Model X. More critically, the deposits are entirely refundable, meaning Tesla has to keep reservation holders on board for at least a year and a half during which time the competition will be launching a wide variety of premium and mass-market electric vehicles.

The risk of this kind of defection is supercharged by the fact that Tesla still hasn't shown the actual, production version of the Model 3, and that deposits have been made without any definitive information about the production car. The vehicles that Tesla showed off at last week's launch were hand-built prototypes, with a totally unverifiable relationship to the vehicles that are supposed to start rolling off production lines at the end of 2017. Because Tesla's major challenge with Model S involves massively reducing costs in order to hit its $35,000 price point, we won't know how good the car really is until production tooling and supplier sourcing is finalized and cars actually start being made at the firm's Fremont, California, plant. Musk has already said that the Model 3's design and production plans are being adjusted, raising the very real possibility that the final production version will be different enough from the recently shown version to risk disappointment and order cancellations. But even if the final production car comes close enough to the revealed version to satisfy the faithful, Tesla must still prove that it can build cars at dramatically increased scale without the rampant quality problems that have plagued Model S and Model X. Production problems delayed bringing both of Tesla's existing cars to market, and owner forums overflow with a huge variety of quality problems.

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