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Published on May 4th, 2016 | by Zachary Shahan

146

Holy Cow, Tesla Has Moved Its 500,000 Cars-A-Year Aim To 2018 (From 2020)

May 4th, 2016 by  


Update: You can now listen to the full Tesla conference call below.

Tesla just released its quarterly shareholder letter. The first item is a whopper: the company aims to move its 2020 target to produce 500,000 vehicles a year to 2018.

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Tesla Model 3 @ Unveiling Event | Image Credit: Kyle Field, for CleanTechnica

Obviously, this is in response to the insanely (nay, ludicrously) high demand for the Tesla Model 3 (up to 400,000 reservations weeks ago, before Elon stopped updating us). If there’s the demand, there’s a way to achieve it, right?

As many commenters here on CleanTechnica and people Kyle and I talked to at the Tesla Model 3 unveiling said (the EVAnnex dudes, for example), with banks, investors, and Panasonic seeing how strong demand for the Model 3 is, Tesla should have no shortage obtaining more financing and agreements to increase battery and vehicle production further.

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Tesla Model 3 @ Unveiling Event | Image Credit: Kyle Field, for CleanTechnica

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Tesla Model 3 @ Unveiling Event | Image Credit: Kyle Field, for CleanTechnica

There have already been several signs that Tesla is aiming a much faster ramp, but that is now crystal clear thanks to the shareholder letter.

Other news this week (that we haven’t yet had time to cover in detail) that hinted at this was that Tesla just nabbed a huge warehouse lease in Livermore, near its Fremont factory — “just over 1 million square feet, or more than 17 football fields.” Yep, that had Model 3 fingerprints all over it.

Another tidbit that could be related to the ramp or could be related to the Model X production problems (or could be related to other matters altogether) is that two of Tesla’s production chiefs are on their way out — “Greg Reichow, Tesla’s vice president of production and one of its highest-paid executives, and Josh Ensign, vice president of manufacturing, will leave the company. A Tesla spokesperson confirmed both departures and said Reichow will remain until his replacement is found.”  One would think that has more to do with the ongoing Model X production problems, but who knows, maybe there’s a difference of opinion regarding the challenge of ramping up to 500,000 vehicles a year by 2018. Can I emphasize that target strongly enough?

Naturally, there’s a bit of a “he said, she said” going on with these departures, and we don’t have enough insight to pick a side, but here’s another quote from that Bloomberg piece: “A person familiar with the situation who isn’t authorized to speak about the matter said the executive changes are linked to delays, glitches, and a recall that have bedeviled Tesla’s Model X. Tesla denied any connection between the departures and production problems with its SUV. ‘This is not about the Model X,’ said a Tesla spokesperson. ‘After being at Tesla for over five years and leading its production team for the past three years, Greg Reichow has announced his intention to take a leave of absence from Tesla so that he can have a well-earned break.'”

Reichow made nearly $6.4 million in cash, stock, & options in 2014 + 2015, so I’m sure it wasn’t a lighthearted decision however it came about. And one could certainly see that the burnout from the past several years left him ready for a vacation rather than a daunting production task. I’m sure Tesla won’t have trouble finding a replacement, though. (Edit: Notably, Reichow’s LinkedIn profile shows no prior experience in the automotive world ahead of Tesla, but over 7 years at SunPower.)

Back to the Tesla shareholder letter, here’s the opening paragraph:

“The overwhelming demand for Model 3 confirms that compelling all-electric vehicles have mass-market appeal. In the first week of taking deposits for Model 3, we received more than 325,000 reservations despite no advertising or paid endorsements. This implies about $14 billion in future sales, making the Model 3 introduction the biggest consumer product launch ever. Since then, reservations have continued to grow to surpass even our expectations. With Model 3, our mission of accelerating the transition to sustainable transportation is more achievable than ever.”

I’ll update this article as I get further into the letter, or I’ll write new articles if it seems warranted. But my big take-home is the same as I repeated many times on Model 3 unveiling night: The conventional automakers (BMW, Mercedes, GM, etc) must be panicking and/or crying right now.

Full Disclosure: I’m long TSLA. Very long TSLA. My articles are not aimed at affecting the TSLA stock price and I’ve been writing in the same way about Tesla for long before I was a stockholder. Just sayin’.






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About the Author

is tryin' to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.



  • Once again, Musk is blazing a trail where no man has gone before. A.) from 50,000 to 500,000 cars a year in 3 years. Who does he think he is, Henry Ford? 🙂 B.) His whole statement about a “fake” target date and a real date is about as unorthodox as it comes, and yet so simple and brilliant. “Meet this date if you want to keep your job, or be our supplier. If not, there will be consequences.” Will they be able to begin production on July 1? Of course not, because 2% (or so) of the parts won’t be ready by this deadline, due to unforeseen circumstances within Tesla or one of their suppliers. But by managing toward that goal (July 1), they have a much better shot of hitting the 98% readiness and being able to build out a contingency plan for the 2%.

    500,000 cars in 2018? Ridiculous. Ludicrous even. But isn’t there a Ludicrous button on Teslas already? So there is a precedent. 🙂

    • NRG4All

      Maybe this is part of the reason for leasing so much warehouse space. If Tesla is trying to get the most out of the $7,500 tax credit, it would make no sense to hold up the line for lack of a few parts. Build around the parts if possible and store those and add the parts as they come in.

      • super390

        This is absolutely about having the flexibility to maximize the tax credit. They’ll empty out their inventory during the “bonus” quarters that come after hitting 200,000, and try to get their costs down and cash up to ride out the hit to new orders as the credit is phased out. Maybe a wave of less affluent owners (who only qualified for a small fraction of the credit, or just don’t itemize like myself) will appear to buy more basic 3s.

        • Bob_Wallace

          It’s also possible that when Tesla reaches the 500,000 per year level they will have driven down manufacturing costs to the point at which they can drop the selling price a few thousand.

    • Bob_Wallace

      Someone was first to break the four minute mile.

      Just because no car company has scaled that fast before does not mean that Tesla won’t. It will be hard but, remember, SpaceX just landed the first stage of their rocket on a barge out at sea. Musk works with capable people.

  • NRG4All

    When push comes to shove, will the Model 3 have a battery configuration that can be replaced? My decision on Lease vs Buy really is based on the long haul. I’ve owned some cars in the past for nearly 20 years and always was able to find parts for it. Things are changing so fast, that will have an effect on my decision.

    • nakedChimp

      What do you expect?
      That they glue the batteries together with the metal frame of the car and then weld it all up so Tesla them self can’t replace them if necessary?
      They will be able to repair for 5-10 years maybe.. depending if the supplier can still deliver parts or you have to find some wrecker parts.

      But do you have any idea how much electronic is in one of those new cars now?
      Finding parts is one thing.. having the software tools to actually activate/enable replacement parts will be the hard part – or better already is.
      If you want/need a car where you can DIY repairs (maintenance is another matter) your time is running out I guess. You’d have to look at one of the kit cars for this kind of thing really.

    • Tesla has stated before it would offer battery upgrades on an ongoing basis (for a price).

      • NRG4All

        That’s what I was hoping for. They appear to have done that with the Roadster for a price and that is fine. My concern is more with new technologies that may make a considerable change to the form, fit or function of the batteries. Then it will take a concerted dedication not to forget someone that may have bought a Tesla 10 years ago after 100,000 miles and may need a replacement. Unfortunately Nissan has made no such commitment and that’s why I’m on my second LEAF with a three year lease.

        • Yes, they also started it with the Model S (last year) and said it’s something they’d offer every year or two as battery tech improves. (Well, it’s continuously offered, but they will keep offering better batteries as they develop them.)

    • All of the Teslas made to date have had modular/replaceable battery packs so I’d expect the Model 3 to be no different. There are cases (like David Nolan, Green Car Reports) where the owner has upgraded to a larger battery on the Model S. It’s a straightforward (if expensive) proposition. The high cost was due to the expense of the battery. As this drops, upgrades become more affordable.

      As for a whole new battery technology supplanting Lithium Ion and time soon, I wouldn’t hold my breath. Lithium Ion is not only a predictable, safe, and mature battery technology, but it has been road tested over billions of miles. When there were a few battery fires in the early days of the Model S, they beefed up the armor plating on the bottom of the car, and haven’t had a reported fire due to impact ever since. Also, Tesla is working with battery experts like Jeff Dahn from Dalhousie University to squeeze the most performance out of Lithium Ion in order to reduce weight, prolong life and lower costs even further.

      A new battery tech may (will) one day be developed, but it will take quite a bit of time to commercialize it and get it to the point that it can be used for automotive applications. And even then, assuming they can make it in a similar form factor to the current Tesla packs, and charge in a similar fashion, new tech battery packs could probably be retrofitted to existing cars.

      • Jenny Sommer

        Battery cost is still one of the great problems of EVs.

        They are slow to charge and depreciation of EVs is high due to batteries.
        Used EVs don’t sell well in Europe at least. The only exception being the Prius.

        • Agreed, but Teslas hold their value pretty well in the US. Tesla’s batteries have been shown to hold up much better over time than others (like Nissan Leaf for example). Long term Tesla Model S owner study in the Netherlands showed an average of only 6% loss over 50,000 miles and an additional 1% loss every additional 30K miles. To be around 92% range after 100,000 miles is pretty good.

          • Jenny Sommer

            NRG4all has a valid point though.
            I wouldn’t buy a new EV with a battery right now.
            The smaller capacity battery in the M3 might be more prone to range loss. You don’t know what battery options will be available in 3-5 years.

            It might not be very important to Model S buyers, expensive cars lose more value in money anyways.
            But there are really cheap options to the Model III.
            If you want a cheap and functional ride you can buy a 8000€ car (Dacia Logan MCV station wagon) and sell it after 3 years (warranty expired).
            The car will have lost 40-50% in value depending on milage.
            You will still get around 0.20€/km.
            That’s a km price you might reach after 150-200k km wit a 35k€ EV (and next to no maintainance).

            There are many different groups of buyers though. I am not convinced yet the market for EVs is that big.
            Maybe a lot of people could get over some of the limitations of current EVs if the upfront cost wasn’t an issue and they would save money from day one.

          • You wouldn’t by a new Tesla? Wow.

          • Jenny Sommer

            I would consider it if I was to buy a new car in that price range.
            The Model III is too small for me anyways.
            I wouldn’t spend that much money on a car in the first place.
            The economics of EVs are still not competitive with cheap ICE cars.
            7 seater under 20k€ now or smaller car under 12-15k when the older kids are out.
            I will consider a used Model III in 12-15 years…should go for 2k€ or less with a used up battery, maybe less.

          • OK, that makes more sense 😀

            “The economics of EVs are still not competitive with cheap ICE cars.”
            -I think they are used, but not sure if you are in need of longer range (not sure what PHEVs go for).

            “7 seater under 20k€ now or smaller car under 12-15k when the older kids are out.”
            -Well, yeah…

          • Jenny Sommer

            I like to spend as little as possible on cars. Never bought a used car for more than two month of income.
            Come on…how long do you want to work for a car?

          • Yeah, get that. I only bought one car in my life. Used one. Been car-free for ~12 years. Way to live, imho.

            Looking forward to getting an EV, and aim to get a fun one, but not looking forward to the auto-oriented lifestyle of FL, and really don’t need one here in Poland.

          • This I agree with. Or well, I used to agree with, but I still definitely appreciate the sentiment. For my first five cars, I always bought them a few years old, to avoid the depreciation hit. I bought a “$35,000 Saab” (when new) for $13K used. Woo hoo! But when my family started growing, and I saw that Toyota was coming out with a hybrid SUV with 7 seats and close to 30 MPG, I had to have it. That meant I had to get on a waiting list and pay full list to get one in the first batch That was 2005, and it was the first new car I ever bought. Still driving it 11 years later. My next car will be a Tesla. Apparently I like to wait in line for cars. 🙂

          • “I will consider a used Model III in 12-15 years…should go for 2k€ or less with a used up battery, maybe less.”
            I think that’s being a bit too optimistic (or pessimistic) about the resale value of the Model 3. Going back to the Netherlands study, and using the average number of miles driven per vehicle in the US (11,244 miles/year), a Tesla battery pack of average performance should have roughly 89.54% of its capacity after 15 years (168,660 miles driven). That’s roughly 192 miles of EPA range for the base Model 3.

            Of course, this is only an estimate, but it’s based on the longest term, most comprehensive study on Tesla battery performance done to date. So it’s as good place to start as any.

            While other parts of the car may (probably will) need to be serviced over that time period, the battery pack itself shouldn’t bring the value of the car down very much. And I find it unlikely that a Model 3 will lose 95% of its value in 12-15 years.

          • Jenny Sommer

            Considering the rapid improvement in autonomous driving it is very likely that the Model III will lose considerably in value.
            It’s likely you can buy a more advanced BEV in the same class for under 20.000$ new in 15 years.
            If Tesla can sell millions of M3s there should be a huge market of used cars in 15 years. Meaning no real collectors value either.
            But feel free to estimate your own value after 15years/200.000km. You will probably have to put in another 2k€ anyways.
            It also depends on the quality. In our climate cars tend to rust away rather quickly.

          • “Considering the rapid improvement in autonomous driving it is very likely that the Model III will lose considerably in value.”

            I would think that a car that has among the best (if not the best) autonomous driving technology available today will hold up better than most other cars available today which have *NO* autonomous driving technology. So I’m not buying this argument.

            “It’s likely you can buy a more advanced BEV in the same class for under 20.000$ new in 15 years.”

            Certainly possible, but what do you actually drive for the next 15 years while waiting? If you want an 100% electric car with 200+ mile range and long distance travel ability now, you buy a Tesla. And if you want to save some money on a Tesla today, you can get a 3-year-old used 85kWh model for around $60K if you hunt around. They’re not depreciating as fast as other EVs, but you can definitely save some money on a used one if you have actual interest and prefer not to take the new car depreciation hit.

            “If Tesla can sell millions of M3s there should be a huge market of used cars in 15 years. Meaning no real collectors value either.”

            Yes, there will be a huge market of used Teslas in 10 years. So if you really want a deal on a Tesla, you will probably have to wait a while.

            “But feel free to estimate your own value after 15years/200.000km. You will probably have to put in another 2k€ anyways.”

            OK, I’ll bite. Using the depreciation calculator here: http://www.money-zine.com/calculators/auto-loan-calculators/car-depreciation-calculator/ and assuming “low depreciation” (because I think the Model 3 will hold up well over time), in 12 years a base Model 3 which sells for $35K new, with 217K km will sell for around $7,965 and will still have approximately 90% of its range (193.5 Miles, EPA rating). Let’s check back in 2028 and see who was closer. 🙂

            “It also depends on the quality. In our climate cars tend to rust away rather quickly.”

            The northeast U.S. is not kind to cars either. But at this point it’s hard to say how well the steel/aluminum body of the Model 3 will hold up over time, mostly because it doesn’t exist yet. Aluminum should naturally withstand oxidation better than steel, but using mixed metals could lead to galvanic corrosion. But this can be avoided by coating or otherwise isolating the dissimilar metals from each other. Ford has been using aluminum body panels over a steel frame in the F150 for several years and these appear to be holding up pretty well.

          • “I wouldn’t buy a new EV with a battery right now.”

            I would, and will. But for my specific needs a short range EV without a long distance travel solution (supercharger network) is not useful. And the S and X are too large, so Model 3 it is.

            “The smaller capacity battery in the M3 might be more prone to range loss. You don’t know what battery options will be available in 3-5 years.”

            The Netherlands study includes 60, 70, 85 and (I believe) 90 kWh battery cars. The specs I quoted for range loss were the average for all cars/all batteries. Tesla’s batteries are likely to improve by the time the Model 3 comes out, and so these stats should only get better. It’s true that larger packs generally hold up better as they have fewer charge/discharge cycles for the same number of miles, but with the ongoing improvements being made with battery chemistry, I could see the Model 3 battery packs retaining most of their capacity well past 100K miles, even on the base model with its 55 kWh (or so) pack. Keep in mind that the Model 3 will be lighter and more aerodynamic, so it will be more efficient than the S or X (it will go more miles per kWh). This also translates to fewer charge/discharge cycles for the same distance traveled.

            To me, it doesn’t really matter what may or may not happen in battery tech 3-5 years after I buy my car. As long as the car has more than enough range when I buy it, and degrades as slowly as the Model S does now, it will still have enough range for me 10 or even 15 years from the purchase date. At that point, if the battery range isn’t sufficient for local and long distance trips, I can either sell it and upgrade or keep it and swap out that battery pack for a new one with much greater range, depending on what else is available at that time.

            “But there are really cheap options to the Model III.”

            For my needs: 100% EV with over 200 miles of range and supercharger access for long distance travel, the only alternatives to Model 3 are the Model S and Model X.

            “There are many different groups of buyers though. I am not convinced yet the market for EVs is that big.”

            400K+ reservation holders would beg to differ with that assessment. 🙂

            “Maybe a lot of people could get over some of the limitations of current EVs if the upfront cost wasn’t an issue and they would save money from day one.”

            Sure. If people don’t need long range, they can lease a Leaf today without much money up front and return it at the end of 3 years before they even have to worry about range loss. And they can save on fuel/maintenance costs immediately. My brother has two Leafs and loves them, but Leaf #1, from 2011, is down to less than 50 miles of range after about 80,000 miles. Still OK for him as he has chargers at work and chargers/solar panels at home. But that wouldn’t get my family where we need to go on vacations (and we’re currently a one-car household).

            So for us, it’s a Tesla or nothing (i.e., keep what we have) at this point.

          • jeffhre

            “If you want a cheap and functional ride you can buy a 8000€ car (Dacia Logan MCV station wagon) and sell it after 3 years (warranty expired).

            The car will have lost 40-50% in value depending on milage.”

            That is very true. And it is a big improvement over most ICEs. It also has the added benefit over BEVs of helping to increase the amount of dollars that I invest into the infrastructure of highly polluting ICE’s, increases my personal footprint by a vast amount, helps to increase the subsidies given to the oil industry, helps to incrementally strengthen the petroleum industry’s argument that they are moving plenty fast enough toward sustainable practices, and moves dollars to countries through more oil consumption, that have factions that are likely to fund terrorism.

            I can afford to support a car that will be powered by my solar panels. And I qualify for the tax advantages. And I can have lower operating costs for the next 25 years, while reducing oil imports and oil subsides that my buying an ICE would trigger.

        • Coley

          True enough, but only because of the high prices on second hand EVs that the owners seem to expect !

  • eveee

    Sure there is risk for Tesla. There is no risk that the world will consider EVs a fluke, anymore, however. Here is the flip side to risk for Tesla. Whats the chance that another major company gets its act together and challenges Tesla in the next two years.
    Well its rising since Tesla now finally has their undivided attention. But then we have to ask all the same questions we ask about Teslas risk.
    But for the entrenched incumbents the risk is much worse. They are cannibalizing their own fleets and writing down their own R and D and assets. To embrace EVs they would have to dump a lot of already spent investments.

    • neroden

      BYD already made the decision to liquidate its fossil-car assets. So BYD is arguably in the best position.

      • super390

        BYD was a battery company first. I think it bought one of China’s existing anonymous carmakers to make the move into EVs, only to have its first products do poorly. So getting out of its legacy gas cars is just their original plan delayed.

        • Yep.

          • Coley

            Any EV maker who can’t replace a failed battery without significant cost is going to be a loser ‘big time’ @Bob Wallace often comes up with the ability to replace a whole battery pack for recharging or failure replacement, offer that to those in the general public looking at EVs and who are looking for a bit additional security and your onto a winner.
            You could also add a replacement vehicle of your choice as part of the EV sales package.

        • Bob_Wallace

          Correct. And BYD brought in Daimler at one point to help them improve quality.

          Their first EVs have done fairly well as taxis. Their batteries seem to hold up very well. There have been stories of high milage taxis that are running 24 hours a day with the batteries ‘rapid charged’ during driver meal breaks.

  • OneHundredbyFifty

    This is no surprise. It is why he is talking about a much more affordable vehicle. With this demand curve they can ramp battery production faster and that means battery prices drop faster. I am not ready to go on record yet but I am beginning to examine going out on a limb and calling $100 / kwhr in the 2020 timeframe rather than the 2025 timeframe. If that happens the term disruptive becomes an understatement. But back to cars –

    Model 3 is a mass production car but it is not the everybody car, it is still for the top 10%. Musk is promising Model 4 will be affordable for pretty much anyone and if he ramps battery production it probably will come to pass.

    • Average new-car price in US is approx. the Model 3. That’s ~50% of the population if you count trickle-down used cars eventually.

      But yes, the more they sell now (and the more options they sell now), the sooner they get to Model 4 for $20,000 or whatever.

      • OneHundredbyFifty

        A good number to find would be the median price. Unfortunately I could not find it online. I am sure it can be found but not as easily as I hoped. In any event the point is that there are a large number of people for whom $33,000 is far too much and the next gen will get a lot more folks behind the wheel of EVs.

        • Bob_Wallace

          I have heard, but cannot confirm, $22,000 as the median new car price in the US.

          If someone finances 100% at 4.5% for 6 years the monthly cost for owning and operating a $27,500 EV is roughly the same as a $22,000 ICEV. ($3/gallon, $0.12/kWh, 13,000 miles per year)

          $27,500 might be the new $22,000.

  • Jouni Valkonen

    Like I have said several times, that it just does not make any economic sense for Tesla to delay model 3 production ramp up.

    • Agreed.

      As Elon said on the call, you really can’t compare this with the X ramp.

  • dcard88

    Elon Musk = muy grande cojones

  • Graphite Gus

    Tesla is always late. Thats a fact. The question is HOW late. So lets start a pool with an estimate of how many Model 3s they will ship in 2017. Musk says 100K to 200K in the 2nd half of 2017. I say less than 1000, and they will all come in December. Any takers? The 2nd half of 2017 is a year away and the car was just launched.

    And I also say he will hit his 500K number – exactly when he originally said he would – 2020

    • Jouni Valkonen

      When delaying product, it is always question how profitable it is to delay product. In the case of model 3 delay, it is hard to see how Tesla could make money from delaying product.

      Only way Tesla could make money by delaying 3 would be if model 3 production was cannibalizing model s and X production. But as 3 and s/X do not share many components, it is hard to see why it would be the case that model 3 would cannibalize s/X sales.

      • neroden

        If Model 3 has quality problems due to design errors (as Model S and X did early on) delaying production to fix the design would avoid warranty costs later. That would be a reason to delay, and the *only* reason I can think of to delay.

    • jeffhre

      Or Model X deliveries, Powerwalls, Powerpacks!

      Car companies don’t announce how many units they will initially be producing – for a reason.

  • vensonata .

    2500 powerwalls and 100 powerpacks delivered in Q1. That, friends, is a dribble. (Remember the 38,000 orders?) They really haven’t had production structures in place. But the gigafactory part 1 seems to be coming into shape so perhaps by Q4 there will be a proper stream of batteries coming out. And there are still some mysterious “step changes” about these battery packs to be announced in July.

    • yeah, i never bought 38,000 at all. people were clicking to see what info they could get. i think the process was poorly designed.

      but they are expecting fast growth of these sales, which seems to be good.

      25 MWh in Q1. never looking back.

      • Jouni Valkonen

        The demand for Powerwall is very big. At least in Finland there would be lots of demand for it, if Tesla just was selling Powerwall in Finland.

        People just are giving high value for Powerwall if they can get protection from power black outs. They are not that concerned if it is profitable investment.

        Too bad that sma and SolarEdge do not provide off-grid mode with Tesla Powerwall, but Fronius Symo Hybrid does provide full off-grid ability if there is a power outage.

      • neroden

        With no money down, I tend to follow the rule that 10% of reservations are real, so 38,000 -> 3800. In which case they still haven’t caught up with backlogged demand.

        • Good measure, I assume. I’m hesitant to assume anything in this case, knowing how much interest there is in Tesla and also that these are not financially rational products for most people. But your rule of thumb seems quite likely.

          • Coley

            Good measure, I assume. I’m hesitant to assume anything in this case, knowing how much interest there is in Tesla and also that these are not financially rational products for most people. But your rule of thumb seems quite likely.

            While I love the optimism on CT regarding the advancement of EVs (while having reservations on the hero worship of Mr Musk, I only refer to people by their first names if I have actually met them and they are happy for me to refer to them in the first instance)
            But, and again, I wish Tesla all the best, but they are going up against the most well entrenched industry in history, the auto and oil industries, is Tesla and Mr Musk fully prepared for ( excuse my language) for the shytestorm the republicans in the US and other FF fully paid up lobbyists and politicians elsewhere are going to direct against him and his company?
            At best they will try to eliminate and discredit his company while trying to emulate his success with their own offerings, while the worst case will see them trying to discredit EVs as the real future.
            Let’s not forget the success of the Murdoch empire

        • vensonata .

          These powerwalls were simply not available. And still aren’t. I can not buy one in Canada. They also still cannot be hooked up in series with the Solaredge inverter. Only one powerwall for an inverter that could handle the full capacity of two powerwalls.
          Now that they have set the price of the Powerblock at the same price per KWH as the powerwall, multiple powerwalls in off grid are more likely uses. But I certainly look forward to the July announcements. Perhaps reality will appear.

  • Alharbi

    Annual production of 500k in two years is a bit challenging, but teslable (as in doable).

  • J.H.

    I wounder how they plan to deal with employee charging. How many jobs are we talking about.

  • J.H.

    It is some what of a surprise that they would announce that they have released the V.P. of manufacturing and production and ramp up to 500,000 units two years earlier than originally planned , all in the same breath. But with all the current reservation in hand, there is know time like the present. I hope they can pull it off. sweat

  • Freddy D

    This implies Gigafactory rampup sooner too…

  • Bob_Wallace

    What does this mean, other than material suppliers are going to have to be ready to ship larger quantities? Material and parts suppliers.

    Tesla can move robots/tools into the rest of the Fremont plant in less than two years.

    Panasonic/Tesla can bring the Gigafactory to full production two years earlier than projected.

    Both companies can recruit and train enough employees to operate the factories. They move from one shift to two/three shifts per day?

    I’d say that if someone is looking for a good job in the Fremont or Reno area then they should set some news alerts and be ready to fill out an application.

    • jeffhre

      What does this mean? This is one of the most ambitious, difficult, complex roads to ramp up in industrial history – making competitive cars is hard. Making a leap like this by people who six years ago didn’t even get calls returned from major suppliers – is unique. They are projecting the impossible…two years early!

      • Yes, Elon even said their aim is for Tesla to be the best manufacturer in the world. Like… of anything. 😛

      • OneHundredbyFifty

        They landed a rocket on a raft that was pitching around in rough oceans. I am not betting against them.

        • jeffhre

          Their next door neighbors did that. They also provided them space for the Tesla design center, some high tech welding expertise, and experience with inconel contactors.

          Very good neighbors for a manufacturer to have.

    • Freddy D

      Ramping up manufacturing of anything this fast is VERY difficult and risky. So many things can go wrong and it only takes one holdup to slow everything. Much of the challenge boils down to scaling up the people and training this fast. Hopefully they’re careful so as to not risk the company. And, yes, spectacular news.

      • Bob_Wallace

        I don’t see a risk to the company. Before they made the presentation a few days ago they knew what material/parts would be needed. They’ve built and tested prototypes. What’s left is adjusting details.

        Tesla may be a little bit late. That bothers me not at all. As long as they deliver before 2021 they win in my book.

        The world needs this. This is (IMHO) what it will take to force other car manufacturers to get very serious about EVs. If Tesla can produce 500,000 EVs a year by 2018 to 2020 then they can ramp up to 2 million or higher per year by 2025 if demand is supported and no other companies are offering options.

        Other car manufacturers are going to have to respond in order to protect their market share. They’re going to have to match range, quality, and cost. And they are going to have to make sure there’s a rapid charging option.

        • Freddy D

          Manufacturing is just difficult. Maybe it will ramp up very smoothly, but so many things to keep track of and get perfect.

          • Jouni Valkonen

            This is why Tesla is aiming high level of vertical integration in the production of 3. This helps in keeping in schedule and organize rapid growth.

          • OneHundredbyFifty

            Intel is laying off 12,000. I imagine some of their “Copy Exactly” technology can be transferred to Tesla.

        • JP

          There’s absolutely still risk in Tesla. Possibilities include: further recalls, quality issues, supplier interruptions, inability to continue cutting costs, inability to hire quality people quickly enough, additional competitors, schedule delays, etc. Tesla is still posting losses and negative cash outflow.

          I do think they’ll (finally) eliminate issues with the Model X, optimize and cut costs for Tesla Energy, and get the Model 3 successfully launched and ramped up. But there’s absolutely still risk that they don’t solve the issues quickly enough before competitors take over.

          • Bob_Wallace

            I was with you until that last sentence –

            “But there’s absolutely still risk that they don’t solve the issues quickly enough before competitors take over.”

            Tesla is so far ahead of other companies that they should be able to stumble a lot and still break the tape many lengths ahead of the rest of the pack.

          • JP

            I’m convinced that even if the Model 3 were delayed by 2 years, no American or Asian companies would be able to catch them. The only ones that could do it (if they fully committed to it) would be the Germans. BMW and VW certainly have the potential.

            I agree it’s unlikely, but certainly possible. Especially if some defect is discovered in their battery production or the Model X has just continuous issues. Musk just said on the conference call that their first “flawless” Model X production run was 5 days ago.

          • Bob_Wallace

            Don’t rule out the South Koreans. I get the feeling that they are hungry. I notice more of their cars in less developed countries where one used to see a lot of Toyotas.

            And L G Chem is a South Korean country.

          • AaronD12

            They also have very low labor costs, like China. They are a competitor if they can bring a compelling EV to market. Their last attempts — the Kia Soul EV, and the forthcoming Ionic EV — are more in competition with the LEAF than the Model 3.

          • Bob_Wallace

            Just months ago the Leaf was the target. Tesla was building cars for a rarified market.

            Now Tesla has dropped a bomb in the medium price car market and blown the status quo away. I doubt any car company seriously thought Tesla would deliver a medium priced EV in large numbers for another five years. Plenty of time for them to work out their response.

            New game. Scramble….

          • super390

            South Korean workers are much better paid than in the past. This year the reported industrial wage average is $3170/month. South Korean unions are strong, and were a major force in the popular uprising that forced the old military junta to accept elections. Before that event, the auto worker wage I saw reported there was $2/hour.

            To put this in perspective, the State of Mississippi now reports an average wage for “production occupations” of $33,590/year or $2800 a month, though this includes many jobs that would be under the average for auto plants. Now you know why the Asians have followed the Germans in building vehicle plants in the South.

          • neroden

            Don’t rule out the Chinese. They’re already catching up with Tesla in their home market.

          • AaronD12

            It is true that BYD is moving up quickly in China, but there is a huge difference in quality, safety, and design in their products. Chinese designs, historically-speaking, have been VERY derivative of other car manufacturer’s designs. Something as fresh as the Model S won’t likely come from China anytime soon.

          • neroden

            Yeah, I think BYD is not going to cut into Tesla’s non-Chinese markets for at least 10 years.

          • Agreed. My understanding is that BYD’s cars aren’t sold in the US/EU passenger car markets in part because they are horrible in crash tests. I’ve also been informed by a battery insider that its fundamental, underlying cell technology was actually stolen from a researcher in Texas (and this is well known in the industry). Not uplifting.

          • claude274

            stolen from a researcher in Texas…? Which tech?

          • claude274

            Man, Nissan has the Leaf 2.0 ready to roll out soon!

          • AaronD12

            Agreed. Chevy only imagined that they will sell 30,000 Bolt EVs a year. Talk about a low target to hit. Now they’re looking at the 400,000 pre-orders for the Model 3 and thinking… did we underestimate demand for EVs?

          • Bob_Wallace

            I’m not convinced GM put a lot of effort into how many Bolts they might be able to sell. I suspect they were more interested in figuring out whether they could sell enough Bolts to lower their fleet MPG average to allow them to sell a lot of pickups and SUVs.

          • Carl Raymond S

            I would describe it as delayed cash flow. They keep earning more than they spend, just not in the same timeframe.

          • Carl Raymond S

            All that Tesla needs is a time machine – so that they can receive customer payment a year or two before they build the cars. Luckily, such time machines exist – one model is called ‘Bank’, and the fee charged for using a Bank, is called ‘interest’.

          • lol. too awesome 😀

          • Jouni Valkonen

            We should also try more negative interest rates. This could stimulate investments.

          • Carl Raymond S

            I think that’s called ‘charity’ – where you loan somebody $100 and they give you back $98.

          • nakedChimp

            Na, it’s called central bank interest rate and is being the norm in Sweden, Switzerland and Japan nowadays.
            The European central bank is taking dips into the idea (with the Germans being most reluctant).
            Also if you read Keynes and Co it should be the norm for an aged, saturated economy anyway.
            The ‘only’ problem we have is that current legal tender doesn’t work with negative interest rates.. but there are experiments running that are pretty successful that test a modified tender that allows negative interest rates without hiccups to the normal functions of an economy.

          • Carl Raymond S

            I don’t see how that works in an economy that allows cash. Banks borrow money and give a low interest rate. They lend it for a higher interest rate.
            With a negative rate, the rate on borrowings would need to be lower (more negative) than the lend rate. Nobody will put their hard earned cash into a bank offering negative rates. They will hold onto their cash and bury it in the garden – a sound investment in a deflationary economy.

          • nakedChimp

            Correct, thus there needs to be a small, permanent devaluation on cash and short term accounts.
            Long term accounts would earn negligible or zero interest. This would put cash on the same playing field as goods and services, but still allow you to save for stuff/retirement (no inflation/deflation would be aim of that system):
            – goods turn bad or become old tech = you don’t want a 10 year old artificial hip implanted do you?
            – services need upkeep cost to sustain the people that offer them = you can’t put a barber or accountant into a closet and pull him out 10 years later and he’s still good to give you a service 😉
            (and yeah – wine, art, gold, etc. will become sought after goods that do not devaluate over time but have storage/upkeep cost hanging on them.. but that’s another discussion and I can assure you it’s not going to be a problem, where as stuff like property or natural resources need some careful approach to get it right as those are natural monopolies)

            The system still allows big profits if you invest into some successful company or high interest rates for risky investments (Tesla? SpaceX? = economy growth). But it will remove the artificial lower barrier for interest rates for long term savings (which is already happening in Sweden, Japan, Switzerland), so that an economy doesn’t have to grow all the time to keep functioning to get the money from accounts (that expect a positive ROI = money aggregate needs to grow = inflation) to make another round to clear goods and services.
            It would allow things to be financed that are low risk, but have a low or zero ROI compared to interest rates on long term savings accounts.

            We could finally get rid of that permanent grow! grow! grow! mantra that is being called for all the time.

            I suggest you check out those guys (even with electronic money):
            https://en.wikipedia.org/wiki/Chiemgauer

            Take note of the relative demurrage cost over time that the holders of cash (or the economy) has to pay.. it’s going down (right graph – red – at bottom):
            http://www.chiemgauer.info/fileadmin/user_upload/Dateien_Verein/Chiemgauer-Statistik.pdf

          • neroden

            It’s called “inflation”.

          • nakedChimp

            inflation devalues legal tender as well as savings.
            negative interest rates only devalue savings.

          • Jouni Valkonen

            Not charity, just rational fiscal politics.

          • neroden

            There are recurring design flaws in Model S. Hopefully Tesla has learned their lessons from all the design flaws in S and X, since that’s what S and X were *for*, and hopefully as a result 3 will be largely flawless…

          • There is an excellent segment in the conference call about this. Aim to publish the video soon.

            Basically, though:

            1) Model S was the first car they really built, and they were just trying to make it work

            2) Model X was built off of that but more complicated.

            3) Model 3 will be the first car they design for ease of manufacturing. Any design choices are discussed with the manufacturing team right from the start and nixed if they aren’t simple/reliable enough.

          • Carl Raymond S

            Elon mentioned it would be possible to make 1,000,000 cars p.a. out of Fremont. Bob Wallace and I tossed around that possibility a few months ago, purely by looking at those images of multi robot stations, where a lot happens in a small space.
            What I don’t understand then is why the need for new digs 20km down the road. What goes there?

          • neroden

            Do you have a cite for Elon saying they could make 1 million per year at Fremont? I’d like to see that. That would be twice what NUMMI produced at Fremont, so they would have to be making some major manufacturing innovations.

            Regarding the new buildings down the train tracks in Livermore…

            Tesla currently has, and intends to maintain:
            — chemicals -> battery packs in Nevada
            — tools and dies in Grand Rapids
            — casting in Lathrop
            — body-in-white, paint, final assembly in Fremont

            But Tesla is also currently building most of its parts in-house in Fremont. (And I think some R&D is still happening in Palo Alto?) It’s quite possible that Livermore will be a parts factory or a parts warehouse or some combination of the two, making more room for the “big” production lines at Fremont.

            P.S. I forgot about 901 Page Avenue, the former Solyndra factory. Dunno what they’re putting there. R&D and parts have been suggested.

          • Carl Raymond S

            It’s about two thirds into the earnings call. Elon said “possible”, but that “wise” was a separate discussion, given the cost of transport to other continents. At some point it’s cheaper to start factory two OS. Thanks for the info.

          • In the call. Am going to highlight it when I publish the video for the call.

          • Bob_Wallace

            A million cars per year would move Tesla into the top 20 car manufacturers in terms of annual production.

            It’s kind of amazing to think that we may be acquiring a major car manufacturer in California. Not only in California, but in the “Greater Silicon Valley”. The East Bay is going to see some significant job growth.

          • 1) Yeah, working on that story.

            2) Hear that’s just supposed to be a warehouse.

          • claude274

            1) Yeah ok I understand
            2) Yeah because Elon was piling demands with too short time to proceed correctly. Wings are cool but full of mites!
            3) Can’t wait to see!

          • neroden

            More risk factors: inability to expand geographic coverage of service centers.

        • They are going to have to respond, like, last year.

          • Karl the brewer

            Do you think we could all crowdsource a new factory for them?

          • Ha. 😀 But crowdinvest or crowdsource?

            1) I would say so if the investment was structured in a legally adequate way.

            2) That would be a bit more difficult… 😀

          • Karl the brewer

            Ha yes, poor choice of phrase. Not gòt many m3 of concrete spare. I’m sure Tesla would argue that buying shares or putting a deposit down on a model 3 would be an investment but I bet there are a few people who would divvy up to help fund the next factory.

          • Yes, definitely. Including some with a healthy amount of cash if provided decent return.

          • Yes! I will take 3 night shifts a week on the assembly line. I want my Model 3! 🙂

          • neroden

            Actually, I just realized that Tesla’s still operating on two shifts. That may be their “secret weapon” for increasing production…

          • super390

            I think that maybe the second major American electric-vehicle specialist will use crowdfunding. It might also use 3D printed composite construction, like Local Motors’ LM3D concept. The process of investing in the company and ordering and customizing your car will be closely integrated. Manufacturing will be localized and dispersed. Maybe by the mid-2020s.

        • Matt

          That is I think the biggest likely impact. The other boardrooms thought they had 5-10 years this drops that greatly. And they have to be thinking that the 2m-3m/yr is much sooner than they feared.

        • eveee

          Seriously. What exactly does late mean here? They just announced some of the most advanced and exciting storage and automotive products on the planet, expected some success, but instead were swamped with orders, and money.
          Investment firms are jostling each other competing to shovel loads of cash their way.
          Wow. What a problem.
          Execs all over the world are dying to have that problem.
          Because of an embarrassment of demand, they have moved up their timetable. So now they might not meet their accelerated timetable.

          Meanwhile, the competition is scrambling to produce data sheets in volume, but doesn’t have any schedule or products.

          Yes, with competition like that, Tesla is really frightened.

          Not.

          Stay tuned for Toyota Mirai developments.

          Actually, Ford, Chevy, Honda, VW, MB, and on have changed their tune or announcements lately.

          I mean they just starved for some news space among all the Tesla attention.

          Nissan just announced 4000 dollar incentives for the Leaf and rather pointedly stated that no reservations were needed.
          We don’t yet know how big the impact is going to be on other companies, but it looks to be much larger than the impact on the high end luxury market which Tesla now dominates.

          And oh by the way, that domination isn’t ending. Its extending. Even without the 3, that pain will be enormous for the major autos.

          With it extending into 35k segment, there could be some real hurt out there.

          Nobody said the switch to EVs would be painless for the incumbent ICE mfrs. Look for it. There is about to be some shakeout.

          • OneHundredbyFifty

            And that means trouble for big oil. It will not take a very large cut in demand to tank prices even more than the bloodbath we saw over the last year. Honestly, as big a proponent as I am of this change if it comes too fast the economic ramifications are a little frightening. The magnitude of wealth destruction will be on an unprecedented scale. Exxon imploding too quickly is not necessarily a good thing.

          • Al

            I really hope that this happens quickly. The slower it happens it gives the oil industry time to crush innovation by having politicians pass laws to favor it. Even though we got no relief when gas prices hit over 4$ a gallon. When prices tanked congress quickly acted to remove the decades old export ban. Plus it would take atleast 20 years for all the cars on the road to become electric. Even if we reach all cars being sold to be electric by 2025 it would still be 2045 before all cars on the road are electric

          • Robert Middleswarth

            Even if they stop selling new ICE cars by 2025 a leap in my option there will still be ice vehicles out there even after 2045. Granted the network of gas stations we have come to depend on would be long gone before 2045 but at that point buying gas would be like buying propane today in limited number of locations.

          • neroden

            There will still be ICE vehicles out there just like there are still Model T Fords and horses out there, but they’ll be insignificant. Very few people keep their cars longer than 12 years and when gas stations disappear, people will be even less likely to keep gas cars.

            You can assume roughly a 10-year time lag. If nearly all new cars are electric in 2025, nearly all cars on the road are electric in 2035.

          • Robert Middleswarth

            I took issue more that 90+ percent of the cars being sold would be EV by 2025. There just isn’t enough battery building capacity out there for me to believe we are going to be able to produce that many EV’s a year.

          • Brunel

            That is not true. A lot of people will switch from slow oil cars to fast EVs.

            I will switch to an EV so I can remotely put on the heater from 10 miles away.

          • eveee

            Its a little to late for that. But don’t be frightened. Peabody coal and a host of others have already hit the skids. The market knows where to put its money eventually. And the current big oil problems are not an accident. The Middle East is wisely putting its bets on the sun and selling oil as cheap as it can to get rid of it. Now if we would all be as foreword thinking, it will all work out well.
            Its not the first time an old tech has been replaced by a new one.
            Yet, there will be disruption.

          • neroden

            Really? I’ve been looking forward to Exxon imploding.

            The fact is that Exxon still has a stable petrochemicals business, which was 75% of their profits in the first quarter. If they’re smart enough to liquidate the “upstream” oil business *completely*, ExxonMobil will still be a going concern.

            I have my doubts about whether they’ll be mentally able to make that jump.

          • Carl Raymond S

            There’s another reason why a price on carbon is essential. To knock out fossil based plastics. There are alternatives, but it might mean paying three cents for a shopping bag instead of two.

          • Bob_Wallace

            As long as the plastic is recycled or sequestered in landfills it’s not a problem for the atmosphere. We can use fossil based plastics as long as we don’t burn the plastic later.

          • Carl Raymond S

            Thanks Bob. I’ll put that into the “less than acceptable, but not life threatening” box. Recycle rates are terrible in most places. People have to give a damn.

          • Bob_Wallace

            My approach is to deal with the rattlesnakes first and then worry about the scorpions.

            As long as the plastic goes to the landfill then its carbon is sequestered. I’m hoping we get some very affordable robots that can ‘pick’ through trash and pull out most of the recyclable stuff. Then we could convert the organics to fuel.

          • super390

            They’ve also built up all that equity in bought politicians. They’re bound to find a use for them.

          • Karl the brewer

            Nice Bloomberg video on this webpage regarding EV’s cutting into oil use and it’s implications.

            http://jalopnik.com/how-electric-cars-could-induce-the-inevitable-oil-colla-1774553397

          • I’ve met a number of people in the UAE very fascinated by Tesla, and genuine fans. They know what’s coming, imho. Saudi’s recent remarks on the matter show it well enough — preparing for a world without a sizable oil market.

        • Ganske Rettferdig

          ….and they are going to need batteries no one can deliver….except Tesla 😉

          And like that isn’t enough, the other manufacturers will need places to charge. Elon has made a bulletproof plan. He will win whatever happens. Only ww3 can prevent that.

      • nordlyst

        Oh but they are! Musk bet his fortune on Tesla, then bet the company on Model S, and is now betting it all again on Model 3.

        This doesn’t mean that any problems with M3 is the end of Tesla. But it does have to be a success. There’s no way Tesla will develop another car if the M3 is a failure.

        I think they are keenly aware of the risk and will do what they can to minimize it, but it’d be foolish to think it can be eliminated.

        My guess is they won’t reach the 500k by 2018 goal, but still be a big success. And by moving the goal forwards they will certainly get there faster than if they still aimed for 2020.

        It’s going to be extremely interesting to see how it affects the incumbents. That has already begun, but we won’t hear much about it until products are getting closer to reality. I’m sure that M3 will change the car business even if it failed completely and ended up toppling Tesla. So from where I’m sitting it’s a win-win, even if I lose my deposit.

        • Bob_Wallace

          I find it hard to believe that Tesla can grow to 500,000 by 2018. But then I remind myself that the people behind those numbers are really smart and are good at math.

          Obviously some unforeseen problem could throw Tesla off schedule. But after the problems with suppliers who could not deliver what they promised with the Roadster and the Mod X I expect some really capable people are keeping a very close watch to see that those problems are not repeated.
          Meteor strike? Sure, that could change the timeline.

          While I find it hard to believe I’m also willing to sit back and see if Tesla/Musk can amaze me yet again….

    • Matt

      I think they still have a big pile of Reno application from the last time. 😉

    • Steve

      source: Electrek
      Tesla will be hosting a “massive” job fair to hire “hundreds” of new production workers this weekend
      Fred Lambert – 2 days ago @FredericLambert
      http://electrek.co/2016/05/03/tesla-job-fair-production-workers/

  • Bob_Wallace

    Why didn’t we put up the money to have bugs installed in the major car company boardrooms?

    Might have needed to pay extra for waterproof units given all the crying and pissing likely happening.

    (I am so loving what is happening these days….)

    • Calamity_Jean

      Forget the car companies, that’s too obvious. What about the oil companies? How soon is the demand for their product going to crash and burn? The Saudi royal family must be chewing their nails and updating their flee-the-country plans.

      • Bob_Wallace

        I doubt global oil demand will drop much over the next ten years. It’s going to take that long to reach purchase price parity, educate the buying public about EVs, and build the battery factories necessary to sell millions of EVs per year.

        There will be some demand drop in the US as our CAFE standards tighten and commercial use becomes more efficient. But that may be largely offset by demand growth in countries where growing economies are going to permit more people to drive cars and motorbikes.

  • Bob_Wallace

    Wonder if Tesla will pull in some people who are experienced in turning out high quality vehicles from larger car companies?

    • From the statements on the call, Elon seemed very confident about the quality of the people they pulled in. Eager to find out…

  • Termin8r

    As a donor to the Tesla Model 3 production program, previously expecting to take delivery of my Model 3 in 2020 at the earliest, I am shocked. Now I have to come to grips with the notion that I’ll have to turn over my current hybrid to my wife two years before I planned to. Damn you, Mr. Musk, if you pull this off.

    • neroden

      Heh. Do I get credit for predicting, in public, before the Model 3 reveal that they’d produce 500,000 cars a year in 2018?

      I think that’s not going to be *enough*. Getting to 500,000 is just a matter of ramping up faster. Above that and they have to build a clone of the factory.

      • Wow. You SHOULD!

        • neroden

          I can’t take full credit — I explained in another comment what I learned about how automated production lines operate, which is what led me to believe that they could do that.

  • JP

    Stunned that they didn’t miss on earnings. I figured the Model X production issues would have cost them again. Think I didn’t realize they would deliver so many Powerwalls and Powerpacks, which probably made up for the lack of Model X deliveries. Also think the pre-owned Model S program just continues to grow. Very good to hear.

    I doubt they’ll be able to hit the 2018 goal, but I feel like the stock market has come to expect Tesla to miss their estimates by a year or so. So now instead of the stock market expecting 500,000 vehicles in 2021/2022, they’re expecting it in 2019/2020.

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