When you read through the announcement and you realize that this is a company that even if it doubled it's current production rate it would still have orders for the close to a year's production, then you have got to pause and be amazed.
How many Model 3s could Tesla produce at its current facilities? 7,000? 10,000? 15,000? It wouldn't be enough to remotely satisfy the demand.
Truth is that once delivery picks up, more people will start to order since currently people like me think it's pointless to order a car that you would have to wait a year to get and that - in most parts of the world - you can actually not order yet. The orders are likely to increase proportionate to the production capacity as Model 3 will be made available around the world.
This company could build 3 Giga Factories around the world that each produce 10,000 Model 3s per week and demand would still not be met. Heck, they could have 10 Giga Factories and they might still not satisfy demand for Model 3.
And then there is the future demand for Model Y and - once they get economy of scale and battery prices go down a bit - demand for cheaper, smaller cars.
All this demand could be met by other car manufacturers if they too produced long range EVs of similar or better quality than combustion engine cars. But no-one does and no-one will for an other year. Don't say Nissan Leaf; it's not long range. And when they finally do, in 2-3 years or so, are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW, Ford, General Motors, Hyundai, Fiat, Toyota or Mazda or are you just gonna stick with Tesla, which by then comes with even better specs than today?
Tesla is the Apple of the car world. There is still room for other producers to make the Android cars that spend 3-4 year playing the catch up game of being one-two models behind in specs, and then maybe finally catch up in 5-10 years. But Tesla will get the better customers and the fat margins if the traditionalists don't hurry. And hurry a lot.
The Model 3 seems like it was premature. It gets mediocre reviews ( https://www.caranddriver.com/tesla/model-3 ), they have 180,000 orders, and they're fulfilling them at about 3200 a month, i.e. 4.6 years to satisfy the current backlog. For scale, Toyota sold about 32,000 Camrys a month last year just in the US. Heck, BMW sold about 34,000 3-series a month.
Tesla should have stuck to high-end markets. It looks like their foray into mass production will end badly.
This car will bring in hundreds of millions of dollars in preorders immediately, and cost much less than that for them to produce when they get around to it over two years from now. That doesn't seem like a good idea to you? If Model 3 isn't in full production by 2020 then the company will no longer exist anyway.
Tesla has received about 400,000 pre-orders for the Model 3 in the span of one month. Mass-market demand for the car is no longer a question. But their ability to execute on these production plans is a different story. Time will tell...
Even just using Tesla's numbers, it's unlikely they can ramp up production.
They currently produce ~25K Model X and S per quarter, and they're having supply issues with battery packs. (see the other, recent thread on them)
How in the world are they going to be producing 20K Model 3s by December, without cannibalizing their more profitable existing sales, and judging by their own previous growth rate and demand problems?
Missing production targets is obviously bad, but after giving this announcement more thought it doesn't seem like awful news if you put this in context with other EVs rather than Musk's always overambitious projections.
Tesla says they are producing Model 3s at roughly 1000 per week now. Considering they are selling Model 3s as soon as they can build them, that would make the Model 3 already the 2nd best selling EV. The top seller is the Model S at a little less than 1,200 per week. The way production is currently ramping up the Model 3 will become the best selling EV sometime in mid January to early February. That isn't as fast as people wanted, but I don't see how this would be a sign of some overall failure with long term side effects rather than a temporary stumbling block as they ramp up production.
If I was a long term investor of Tesla, I don't think this would have me worried and I might even try to pick up some extra shares tomorrow at a discount.
To be honest, I'll be surprised if Tesla is producing EVs at that rate too... They have 3 models of cars. I'm not even sure there is a market for 500k/year of those three models. Even expanding that to 4 models (Y) would still leave those numbers hard to hit.
Most people who understand how difficult it is to produce a new line of cars, or have been listening closely to what Elon has been saying pretty much expected that ramping up production would be hard and Tesla would miss their goals many times. Tesla has never delivered a car on time. But there is enormous demand for this car and they will eventually make it work. At the current run rate they are already able to produce around 100,000 Model 3 per year, and are ramping up quickly
> For Musk to hit all of his targets, Tesla would need to build about 430,000 Model 3s by the end of next year. That’s more than all of the electric cars sold planet-wide last year.
> Even if half of the Model 3 inventory shipped to other countries, 2 U.S. sales under Musk’s targets would outpace the BMW 3 Series and the Mercedes C class—combined.
> To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.”
If they could pull this off this might be a great investment by Tencent.
It's also great for the car industry and environment as well. Especially considering their work on automated driving. If they get that many cars on the road it would give them a ton of data and a big advantage/lead in AI over other companies. But it could also be setting the bar too high and setting them up for failure (even though they might otherwise have nailed targets).
Regardless, as a design fan it would be interesting to see so many Teslas on the road. They are great looking cars.
I’m not pro-Tesla, I think they’re horribly mismanaged, but let’s be real.
The Model 3 is selling well, and ONLY in the US. Even if they hit peak demand they can just start selling to Europe and China (planned for later this year) and they’ll have plenty of new customers.
I've had my Model 3 reservation since the day they opened... but it's highly unlikely to assume that Tesla can hit those production marks with the (admittedly) limited line up it has.
Across their entire lineup BMW sold 2.4M cars in 2016 (including MINI) [1]. I just don't see them selling 500k/year in the immediate future. Once they add models (the Y, a replacement for the Roadster, and a Truck), then they very easily could blow through that rate. But baby steps... I'd rather see Tesla exceed modest expectations than fail to meet unrealistic ones.
Sure but the huge response nevertheless caused Tesla to reconsider its whole approach to how much demand there would be and consequently how much extra capital they would need to meet the demand. And now it looks like Tesla will be producing Model 3's in three factories world wide.
You can be sure that GM and Ford are taking these numbers very seriously if only because the Tesla truck is offering compelling utility and a very reasonable price aside from the controversial design.
Tesla is severely supply constrained. Wait times in some areas is one year. They could easily sell 3-4 million this year if they had the supply, and this is before their $25k car which should be available by 2025.
I think people are assuming that this prioritization is going to cause way more delays than it really will.
There are about 120,000 Tesla owners out there right now. Maybe 130,000 by now, my facts are slightly out of date.
How many of those will be reserving a Model 3? These are people who 1) already have a car 2) which is still pretty new, since most Teslas on the road have been sold in the past couple of years 3) are now used to driving a large, powerful, luxurious car.
Why would they be buying a Model 3? It'll either be because some other car needs replacing at the right time, or they need an extra car, or they don't like the Model S and want something smaller. I don't think that's going to make up a huge proportion of the current owners.
I'd guess a few thousand at most will be reserving a Model 3. That's going to push other people's deliveries back by, what, a month or two? When the wait time is already a year and a half for the first person in line, I don't see this making much of a difference.
Those are high numbers, wow, and Tesla hardly started producing them in mass until mid year 2018. They could get to 50k a calendar year if Q3 holds. Just for estimation purposes let's use that. It's hard to believe they'd do as well as one of the best selling cars of all time, but they are in a different segment too. Tesla is selling cars that are more expensive than average, maybe a more fair comparison is the bmw 3 series, audi 3 or 4 series type cars. At least Tesla is doing pretty well at the current moment, but they are not doing as well as Mustang or Corvair - some of the best selling cars of all time.
Tesla has been limited by production of batteries and cars, now they have scaled those a lot. But they aren't the fastest of history, that seems clear. Unless they suddenly sell 125k cars a quarter they won't catch Mustang.
They still have a ~400k net reservation backlog (based on investor call math). So close enough?
Tesla has demand levers available to stoke additional demand when supply is not constrained. They'll have sold almost half a million Model 3s with no active marketing effort (besides a Youtube promo video here and there) by the time the backlog has been worked through.
Crude (Brent and WTI) is trending higher [1], which is only going to help EV sales. EVs are already a slam dunk TCO-wise in most of the country except where fuel is still cheap in the Midwest/Appalachia [2].
They have already sold a lot of Model 3s, and they have 16 months to sell a lot more of them. Personally I don't really care all that much about when they hit 5k/week, 6k/week, or whatever. Even if they stayed at 4k/week that is 240K cars over the next 16 months, plus however many S/X/Y models they sell in that time.
The counter argument is that the demand for the 3 will be exhausted at some point, which could well be true. But the availability of the cheaper short range Model 3 will spike demand before that happens.
How many Model 3s could Tesla produce at its current facilities? 7,000? 10,000? 15,000? It wouldn't be enough to remotely satisfy the demand.
Truth is that once delivery picks up, more people will start to order since currently people like me think it's pointless to order a car that you would have to wait a year to get and that - in most parts of the world - you can actually not order yet. The orders are likely to increase proportionate to the production capacity as Model 3 will be made available around the world.
This company could build 3 Giga Factories around the world that each produce 10,000 Model 3s per week and demand would still not be met. Heck, they could have 10 Giga Factories and they might still not satisfy demand for Model 3.
And then there is the future demand for Model Y and - once they get economy of scale and battery prices go down a bit - demand for cheaper, smaller cars.
All this demand could be met by other car manufacturers if they too produced long range EVs of similar or better quality than combustion engine cars. But no-one does and no-one will for an other year. Don't say Nissan Leaf; it's not long range. And when they finally do, in 2-3 years or so, are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW, Ford, General Motors, Hyundai, Fiat, Toyota or Mazda or are you just gonna stick with Tesla, which by then comes with even better specs than today?
Tesla is the Apple of the car world. There is still room for other producers to make the Android cars that spend 3-4 year playing the catch up game of being one-two models behind in specs, and then maybe finally catch up in 5-10 years. But Tesla will get the better customers and the fat margins if the traditionalists don't hurry. And hurry a lot.
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