Elon Musk Deconstructs Tesla’s Production Ramp Timelines

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Elon Musk recently went on ARK Invest’s “For Your Innovation” podcast, where he talked about Tesla’s progress with autonomous vehicle tech and the company’s production ramp rates for Model 3 and beyond. His comments shed light on his view of the company’s progress with the Model 3 production ramp compared to earlier estimates and help the rest of us better understand the company’s oft criticized delays.

You can listen to the full ~29:09 minute podcast from the ARK Invest site, can download it directly, or can simply pop it out into a new window.

When it comes to advancing the world’s transition to electrified transportation, Tesla is indisputably the one company in the world that lives at the proverbial tip of the spear. Elon is not just the spokesperson for that push, he is the driving force behind the push and has built up a team of like-minded, mission-driven individuals to bring his vision to reality. The downside of pushing so aggressively is that he is often overly optimistic about his timelines, to such an extent that friends and foes alike have come to calling his aggressive timeline estimates “Elon Time.”

In talking with ARK Invest CEO Cathie Wood and ARK Invest Analyst Tasha Keeney on the show, Elon talked about Tesla’s timing and just how much a few weeks really matter when it comes to exponential curves in production ramps. “When making estimates against an exponential, small changes in the calendar break point have enormous percentage differences,” he said. These deltas were realized as Tesla struggled to ramp up production of the Model 3, resulting in many analysts crying wolf, stating that Tesla was doomed to bankwuptcy.

Early estimates of the production ramp from 2017 showed very, very low production numbers for the early months as Tesla feverishly worked to build the plane while flying it. Elon tweeted back in 2017 that he felt that the company could be pushing out upwards of 20,000 Model 3s per month as early as December of 2017, representing a run rate of 5,000 vehicles per week. The company struggled to overcome the early issues with the production ramp up, only hitting the target rate of 5,000 Model 3s per week some months later in June of 2018.

Tesla Model 3 Production Ramp-Up Scenarios

The realization of that key 5,000/week goal allowed Tesla to collectively breathe a sigh of relief and take a few steps back from the insanity of the production ramp. As the dust settled, we were left with an impressive exponential curve that showed just how much Tesla had accomplished with Model 3 production.

“On an exponential curve, a year or two difference is enormous,” Elon said.

The Tesla team had built an entire production line for a completely new vehicle and ramped it up from 30 vehicles per month to more than 5,000 vehicles per month in just 1 year. “Getting to 5,000 cars peak production per week was offset by approximately 6 months from my initial estimate last year (2017).” That is bonkers and demonstrates that the early struggles and large gap between December’s target of 5,000 vehicles per week and the reality of closer to 1,000 vehicles per week did not hint at an impending doomsday for Tesla, but just a delayed gratification that ultimately required all hands on deck.

With just 6 months of full production of the Model 3 in 2018, the company still managed to effectively double the deployed fleet of Tesla vehicles in the world. “Last year, we basically doubled our global fleet,” Elon told Cathie and Tasha. That defies the imagination and speaks to Tesla’s ability to achieve what would have previously been called impossible. It reignites the flame in each of us that lets us once again dream about the impossible. When my kids tell me something is impossible, I don’t agree with them anymore. Instead, I tell them that it is not impossible, it is probably just really, really hard.

Looking to the future, Elon is still as aggressive as ever. Cathie prodded him for production estimates for 2021 and 2023 and Elon excitedly dreamed about the future. “My guess for 2021 is 1.1 million cars for Tesla,” he said, followed by an estimate of 3 million cars per year in 2023. That’s four years away, for those out there who are keeping track, and represents a tripling of global EV demand in 2018, just from Tesla.

Elon’s relentless push for the future that seems to obvious to him is inspiring and calls to mind the classic Apple commercial “Here’s to the Crazy Ones,” from back in 1997 when Apple was living through one of the most innovative periods in its history.

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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