Tesla Model 3 deliveries begin, 30 lucky Tesla employees get their keys

We use the term “keys” advisedly because Model 3 owners will enter and start their cars with smartphones or NFC cards. Model 3 owners don’t get cool, car-shaped control fobs like those used with the earlier and more expensive Models S and X.

Musk also revealed updated reservation numbers for the company’s first mass market car. Tesla is holding more than 500,000 reservations with refundable $1,000 deposits, Musk said. The previous public number was 373,000 reservations, revealed in a Security Exchange Commission filing way back in May 2016. With more than a half million reservations in hand, Musk said new buyers will not take delivery of their cars until the end of 2018.

Musk told reporters yesterday that 50 Model 3s came off the line. Of that first batch, 20 will be used for testing and the remaining 30 were delivered. The lucky first owners are all Tesla employees, most likely employees who work at the factory where the Model 3s are built. The first reservation spots were allocated to company employees and within that group, priority was given to locals.

Now that the naysayers about Model 3 production even starting this year are shut down, Tesla’s more difficult challenge lies ahead: ramping up production to levels at which the company can become and remain profitable. Musk predicted 30 units in July, 100 in August, 1,500 in September, and then growing fast to 20,000 a month by December.

Musk spoke of the anticipated challenges growing Model 3 production levels for the rest of 2017. “We’re going to go through at least six months of manufacturing hell,” Musk said, according to Reuters.

No information is available about the actual retail prices as equipped for the first 30 Model 3s. While the starting price is $35,000, options including performance, luxury, and trim upgrades can easily drive the list price to $50,000 or higher. The first Model 3 owners will still be able to take advantage of a $7,500 federal tax credit, As Tesla’s aggregate unit sales grow, the credit begins to phase out starting in the second calendar quarter after the manufacturer delivers 200,000 all-electric vehicles to buyers in the U.S.

If all of the stated half million reservations stick, the diminishing tax credit clock could start ticking for Model 3 buyers in early to mid-2018. Even though people in all economic brackets are fond of tax credits, arguably the credit could be more of a purchase-decision factor for cars with $35,000 starting prices than to Model S buyers, for example, with the upscale car’s $69,500 base price.

The important news is that Tesla Model 3 deliveries started, meeting the company’s promised schedule. Now the drama will be focused on how quickly production ramps up.