Shopping for premium vehicles usually affords buyers choices between the different Series of Classes that vary by performance, features, and size. This is no different for the 2017 Tesla Model 3, which is to the Model S what the 3 Series is to the 7 Series.
There is also another benefit to the introduction of the Model 3, and that is cash.
Tesla’s superstar CEO Elon Musk has categorically stated the company’s mantra for the coming year: cash is king.
This is because the company has previously suffered from negative cash flow due to the production delays that plagued the Model S sedan and Model X crossover – more so for the latter.
All the hold up caused cash to be stuck in inventory, but once production rates picked up the automaker’s financial arteries were unclogged and it has entered into this year with positive cash flow for the first time.
Assuming the Model 3 is a simpler vehicle to produce due to its nature as a smaller version of the Model S, plenty of those considering the larger models going for this upcoming one would do the company plenty of good.
Higher volumes would be churned out which translates to less cash tied to components and inventories, meaning better cash flow. The goal, in a way, is to draw buyers from the more expensive models to the Model 3; and it shouldn’t adversely affect profitability. After all, we expect the profit margin percentage of the Model 3 to be equivalent to that of the Model S and Model X.