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Tesla CEO Elon Musk says demand for Model 3 is like serving hungry customers hamburgers

Tesla more than doubled its second quarter sales as orders for the Model S continued to rise despite introducing the cheaper Model 3
Elon Musk
Elon Musk has taken Model 3 order cancellations in his stride

Tesla Inc. (NASDAQ:TSLA) chief executive Elon Musk said about 63,000 people have cancelled their orders for the Model 3 as he presented the electric car maker’s second quarter earnings.

Total orders for the group’s first mass-market electric vehicle have fallen to 455,000 from 518,000.

But Musk shrugged off the cancellations, noting that the company has been averaging about 1,800 new Model 3 reservations per day since the first 30 cars were handed over to Tesla employees on Friday.

READ: Tesla's Elon Musk talks of "unrelenting stress" on Twitter

“It’s like if you’re a restaurant and you’re serving hamburgers, and there’s an hour-and-a-half wait for a hamburger, do you really want to encourage people to come buy more hamburgers?,” Musk said in an earnings call.

Deliveries of the Model 3 will begin in autumn. Those who put down a deposit now for the vehicle are unlikely to receive them until the end of 2018, according to estimates.

Difficult production ramp ahead, says Musk

READ:Tesla's Model 3 rolls off the production line as Musk admits company faces production challenge

Telsa expects to produce 1,500 Model 3 vehicles in the upcoming third quarter, 5,000 vehicles produced per week by the end of this year and 10,000 per week by the end of 2018.

"What we have ahead of us, of course, is an incredibly difficult production ramp," Musk said.

"This is maybe the best I've ever felt about Tesla, to be frank. Last week stressed the hell out of me."

Second quarter production and sales gain

In the second quarter, Telsa’s vehicle production jumped 40% to 25,708 units. Deliveries of the Model S and Model X vehicles rose 53% to just over 22,000.

Despite the launch of the cheaper Model 3, Telsa said it has seen an increase in orders for the Model S. The Model 3 has a starting price of US$35,000, compared to about US$55,000 for the Model S.

Sales in the second quarter rose to US$2.79bn from US$1.28bn the same period a year ago.

The net loss widened to US$401mln from US$293mln, reflecting the costs of ramping up the Model 3.

Shares jumped 6.48% to US$347.0 each in after-hour trading in the US.

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