After proudly announcing reservation numbers for the Tesla Model 3 as the “biggest product launch of all-time”, Tesla has refused to officially update the number of reservations since May 2016.

They refused to confirm the number again this week during the first quarter financial result call, but CEO Elon Musk did say that reservations were growing every week despite the fact that Tesla’s total customer deposits were down.

We have been tracking customer deposits to estimate Model 3 reservations for a while now since Tesla requires a $1,000 deposit with every reservation.

It rose to an all-time high during the third quarter 2016 with close to $700 million in customer deposits, but it has been falling every quarter since.

During the last quarter, it fell to $613 million. Tesla has been attributing the decrease to the increase in Model X production working through the backlog of Model X orders that accumulated reservations with deposits.

That was thought to be mostly over before 2017, but CFO Deepak Ahuja said this week that it had an impact last quarter as well:

“What I’m seeing is that we had an artificial backlog in our customer deposits of Model Xs. And as our production of Model Xs has stabilized and as our mix of Model S has increased relative to X, we have cleared that. So it’s nothing unusual from what I’m seeing there.”

Despite the decrease, Musk says that Model 3 reservations are still increasing and he explains why he doesn’t want to confirm the actual number of Model 3 reservations:

“Here’s the problem. If we do that, then people run off and make all sorts of conclusions based on that, that really have — that are not predictive of the future. Because you can’t test drive a Model 3. If you come into our stores and you want to buy a Model 3, we try to get you to buy a Model S or X instead. We anti-sell the Model 3. But I mean, that’s — reservations continue to climb week after week. No advertising, anti-selling, nothing to test drive, still grows every week.”

The “anti-selling” has been going on for a while. Musk went on a Tweetstorm about it in March and Tesla published a blog about it last month.

The company also often contacted Model 3 reservation holders to try to sell them the Model S.

Musk claims that Model 3 reservations are still “climbing” despite the “anti-selling”. At this point, based on overall deposits, it’s clearly above 400,000 and most likely getting closer to 500,000 reservations.

Like Musk said, the fact that it is the backlog before the car has ever been in customers’ hands needs to be considered. By the time Tesla hits its targeted production rate of 10,000 units per week in 2018, it is likely to still have months worth of orders in its backlog.

As for American reservation holders, Musk said that he is confident most – if not all – reservations holders will have access to the federal tax credit. As you may know, the $7,500 federal tax credit starts to phase out after an automaker hits 200,000 rebates. If almost all customers took advantage of the credit for the US deliveries, Tesla should have hit the 200,000th mark in the first few months of Model 3 deliveries in the US depending on the production ramp up.

The tax credit program states that the phase-out period starts during the second calendar quarter after the calendar quarter in which it reached the cap – meaning that customers will still receive the full $7,500 tax credit for at least a full quarter. In other words, people will still get the full credit for 3 to 6 months and depending on the production rate of the Model 3 at that point, it could result in a lot of people benefiting from the program since there’s apparently no limit on units.

After that, the tax credit is reduced by 50% for 6 months and then another 50% for another 6 months before being completely phased out.

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