Tesla Model 3 Max Production Looks To Be About 80,000 Units In 2017

2 weeks ago by Steven Loveday 73

Tesla Model 3

Tesla could produce about 80,000 Model 3 vehicles in 2017, under perfect conditions.

Despite the positive news coming from Tesla and CEO Elon Musk on the recent fourth-quarter earnings call, Wall Street analysts are skeptical.  There are concerns about the company’s ability to live up to production dates and subsequent efforts leading to volume production of the Model 3, and stocks are dropping.

What exactly are these “impossible” goals?

Elon Musk has made it clear that “the rate of production is as fast as the slowest component in the vehicle.”

Musk explained:

“So when we place parts orders with our suppliers, we’ve told them 1,000 a week in July, 2,000 a week in August, and 4,000 a week in September. These are parts orders. Then the parts need to arrive, and they need to be turned into a car and the car needs to be delivered to customers.”

According to Electrek, using the above information as a foundation, Tesla could produce about 80,000 Model 3 vehicles in 2017, under perfect conditions.

Let’s look at a rough estimate of the numbers, the way we see them, based on Musk’s statement:

  • July – 4,000
  • August – 8,000
  • September – 16,000
  • October – 16,000 (assuming there is not any additional ramp up in 2017, since Musk gave no indication of numbers beyond those for September)
  • November – 16,000
  • December – 16,000
  • Total – 76,000

Electrek shows the ramp up as a continuous growing curve (since this is what Tesla has referenced) and factors in a 10-day delay for deliveries outside of the area surrounding Tesla’s Fremont factory. Either way, you come up with similar figures.

For an even more reasonable estimate, if we account for production starting a month late, and the ramp up t0 16,000 per month coming another month late, we are looking at 52,000 Model 3s by the close of the year.

The chances of perfect conditions are nearly impossible, but it is interesting to see the potential. Keep in mind that upwards of 400,000 people put a deposit down on the Model 3 – and although we have no way of knowing how many people will follow through – this “perfect” situation would only cover 20 percent or less of those orders. Musk himself made it clear that perfect conditions will be difficult, mostly due to supplier delays. He admitted:

“It only has to be 1% and then we either have to make those parts manually at great cost or slow down the production rate. And it’s at great cost. We make something manually, as opposed through mass production, it can be 10, 20, 30 times more expensive.”

At the earnings call, Musk repeated what the company has mentioned time and time again:

“The rate of production is as fast as the slowest component in the vehicle. And when you have several thousand unique items, it can move as fast as the least likely and worst executing part of Tesla or our suppliers. That’s just the way it goes.”

But, for now, execution is moving forward as planned, and is intended to meet the aggressive timeline.

In order to be doubly sure that all goes as planned, Musk will be actively involved in many tasks in the coming months. This is not unlike that of the stories we heard in the past regarding the CEO having a sleeping bag and a desk in close proximity to the Model X production line.

There is a multitude of scenarios and variables at this point. Estimates and speculation are just that, and only time will tell. The fact that the company is in line to begin production on time, and has a significant ramp-up plan in place, is an achievement in and of itself. We shall see how it all plays out.

Source: Electrek

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74 responses to "Tesla Model 3 Max Production Looks To Be About 80,000 Units In 2017"

  1. John says:

    If they pull this off, or even get close, traditional automakers will be terrified.

    On the other hand, if they fail, or are late, those same automakers will exploit that at every opportunity.

    I hope Tesla succeeds. I want a Model 3 before the end of the decade!

    1. Chris O says:

      I’m sure Model 3 has carmakers spooked but no matter how late it is, nobody in the industry has similar compelling, supercharger supported long range EV in the works.

    2. Devin Serpa says:

      Traditional auto makers are already terrified and the S and X were years late.

      1. Dav8or says:

        What in the world makes you guys say stuff like this??? What evidence do you have that anybody in the auto business is “terrified” by Tesla?

        I’m sorry, I just can’t see the terror. It must be very, very subtle. 80,000 units for the year is great. GM did 237,000… just last month alone.

        Are GM and others watching Tesla? Yes. Are they impressed with Tesla’s product? Probably. Are they deeply concerned about their future? No. Are they planning EVs for the future? Obviously.

        1. Devin Serpa says:

          Yes perhaps it is hyperbolic to suggest a corporation is terrified since corporations don’t have emotions, they arn’t alive.

          The C-suite of humans on the other hand are concerned with making money for their stockholders. Most auto C-suites don’t get bonuses if they don’t meet certain targets. They all watch every aspect that may affect their bottom line. From raw materials, to supply chain distribution, to labor staffing, to market fluctuations of exchange rate of their respective currency, to brand image, to recalls, to regulations, to fuel costs of their products, to warranty claims, to potential maintenance co-profit with dealerships, to OEM after market profit, to competitors…

          Lots of aspects of EVs represent a threat to traditional auto makers. Especially auto makers that only makes EVs such as Tesla.

          Raw materials of batteries have fallen at such a fast rate, potential maintenance profit is negligible, fuel costs are falling (solar and wind), customers have recorded high ownership satisfaction.

          You are in charge of mitigating this threat. Remember, stockholders are counting on you to make increasing profit, not the same profit as last quarter. Oh and Generation Z are driving less and owning less cars than previous generations (read public transportation, urban living and Uber), and Generation Y (millennials) want more technically in their cars, Generation X is getting older and want self driving cars. The baby boomers? Some have informed me they’ve bought their last vehicle recently…

          How might you handle this threat?

          Pretty terrifying isn’t it?

        2. Mister G says:

          AAAAALLLLLL ELECTRIC
          AAAAALLLLL ELECTRIC….is bringing nightmares to ICE manufacturers and fossil fuel industry…that’s a major reason TRUMP won working class voters in fossil fuel states.

        3. Matt says:

          So true. I wholeheartedly want Elon and Tesla to succeed, but the competition is only starting to heat up. I expect Tesla to be wildly successful with the Model 3, but in 10 years Tesla will be competing with EVs from…everyone. How Tesla succeeds wildly then and differentiates itself as the “Apple” of EVS will be interesting. I expect VW / Audi , Nissan, and Mercedes to start putting out some compelling EVs within 5-10 years. The future of EVs and solar are indeed very bright.

  2. Jr says:

    But that nummers are just for USA, if they start in Europe it will be a lot more.

  3. Are they planning on ramping up to more than 16,000 / month? If not, that is ~192K / year.

    76K this year.
    192K in 2018.

    That leaves ~115K left in the deposits they already have (~383K?), so they finish the depositors reservation some time in early July of 2019.

    1. AJ says:

      Didn’t Musk already say the first 2 years of production are already sold. So I guess it would be mid 2019 by the time they deliver 400k cars.

      1. wavelet says:

        Not a single car has been sold yet; reservations aren’t sales, and Tesla is (rightfully) very careful not to label them as such.
        Now you can use various formulas to try to convert # of reservation to likely initial sales, but that’s a different matter.

    2. needa says:

      Seems like 400k is the 2018 figure Musk mentioned. That’s 7k a week.

    3. Pushmi-Pullyu says:

      “…they finish the depositors reservation some time in early July of 2019.”

      Only if the total number of deposits (less cancellations) don’t grow between now and then.

      Not merely unlikely, but almost mathematically impossible.

  4. ffbj says:

    The answer is contained in the question. They won’t make that 80k, since nothing works perfectly on this sort of scale, with this many moving parts.

    How many they will produce is tough to say exactly, since no one can foresee all the variables and how they interact. If they top 50k I would be surprised. On the low end I think they could do half that.

    Today their stock is once again spiking upwards as their raising of cash is considerably less than many thought it would be. Probably some shorts closing out too.

    My view is that though the Bolt has beaten the Model 3 to the punch, it actually might not hurt Model 3 sales, and may help them, as it tends to legitimize the whole concept of the ev.
    Somewhat like an aperitif, before the main course, the Bolt will whet the appetite for the Model 3.

  5. Title states 80,000 … article has math that assumes 76,000 under idea conditions.

    My bet is actual numbers will be lower due to:
    1. slight delay in start of production
    2. slower that expected ramp up rate (doubling production rate each month may only be 1.5x-1.75x vs 2x)
    3. a plateau occurs briefly in the production ramp up to stabilize production process, or make an adjustment to production line.

    What was presented was an ideal theoretical maximum ramp rate. It makes sense to have an inventory of parts at ready should maximum ramp rate be possible (and likely to occur some week, but not all weeks).

    1. Dan says:

      I like how the opening paragraph implies that 80k units in 2017 is the pessimistic view held by Wall Street. Unfortunately it’s not Wall Street but Musk, not 80k but 76k and not a pessimistic estimate but quite the contrary – in fact, too optimistic for Musk to name the number directly.

  6. unlucky says:

    If the number is 80K, I’ll take the under.

    1. Pushmi-Pullyu says:

      One would have to be a sucker to take that bet, even if you give long odds. Even in the very unlikely event that everything goes smoothly and there are no delays, the projection here is 76k, not 80k.

      I’m a big Tesla fan, but saying “no delays” in the same sentence with “Tesla” is hard to say with a straight face. 😉

  7. tftf says:

    “What exactly are these “impossible” goals?”

    They are impossible, as the name implies.

    Either that or Tesla will face expensive recalls or warranty claims down the road (if it rushes the Model3 to market in 2017).

    1. Get Real says:

      Troll harder tftf as York shorts get tighter and tighter.

      You know as well as I do that as long as Tesla starts Model 3 production in 2017 then they win and you lose.

      Actually the whole world wins and you and your fellow unpatriotic d-bag shorters lose.

    2. Chris O says:

      Oh no, there will be recalls? Those are so rare, how to even survive such an almost unheard of catastrophe? /sarcasm

      Meanwhile in the real world even a quality champ like Toyota recalls cars by the millions these days, it’s just how the industry rolls.

  8. Kdawg says:

    I have the bar set really low for Tesla. If they make 5 digits of the Model 3 this year, I would proclaim that as a major victory.

    Heck, at this point, if I could just see the production version, that would be a major victory.

    1. (⌐■_■) Trollnonymous says:

      Most likely going to be late and maybe 28K built.

      That 400K reservation will probably only net 275K sales.

      1. Kdawg says:

        I’m curious as to how the US market will respond after the initial rush of sales. Let’s say there are 250K reservations for people in the US. After that quarter-million people get their Teslas, will many more step up, or will we have a factory that can crank out 500,000 vehicles, but no one is buying?

        1. needa says:

          I think many are waiting on the Y. I know I am. Need room for my pup.

        2. Pushmi-Pullyu says:

          That is an excellent question. Is there really a substantially larger market, today, for designed-from-the-ground-up 200+ mile BEVs?

          The faltering Bolt EV sales last month make this a highly relevant question. I was hoping that the astonishingly high level of Model 3 reservations — reportedly the highest number of paid reservations for any product, any time — indicated a large and growing potential market.

          Here’s hoping I wasn’t being overly optimistic! Here’s hoping that last month’s sales figures for the Bolt EV was just a bobble, an outlier rather than the start of a trend. Here’s hoping that Bolt EV sales will recover this month!

          History strongly indicates that at some point, the EV revolution will enter an “S-curve” marked by a sustained period of exponential sales growth. Will the advent of 200+ mile BEVs be the start of that trend, or are we going to have to wait a few more years before sales growth really takes off?

          Unfortunately, nobody has a crystal ball that will answer that question. We’ll have to wait and see.

          1. Shane says:

            The only reason BEV sales haven’t started up the S-curve is that manufaturers aren’t making or widely distributing them In large numbers.

          2. David Cary says:

            My family has a 3 reservation but would not consider a Bolt.

            When you are paying $35k for a vehicle, you want a little something. My wife had some interest in the Bolt but I suspect once she sees it, it will be a non starter.

            Full disclosure – I have not seen a Bolt in the wild. But a skinny car isn’t going to fly in conventional world. Mind you, she drives a Leaf currently. She wants bigger or at least more substantial feeling.

          3. Jason says:

            So I wonder how many people are like me? I haven’t put down a deposit because I can’t commit to the purchase, yet I’m very interested.
            I also never purchase anything sight unseen, so great applause for these ~400k people who have put down their $1k deposit.

            And I am currently in the finance cycle for my current vehicle, so I can’t just drop that and change to Model 3, unless they have some great deal to assist with that, which they won’t have because they don’t need it yet.

            Where I am, we just got Tesla SC installed and everyone I know asks about it and is very interested, but I think the up hill battle is still convincing the normal person that EV is a great choice. It is more about status quo and that is very hard to break. The best thing EV enthusiasts can do is give people a drive and show them the great benefits. I suspect most have an attitude is superiority that actually puts people off side rather than bringing then along for the journey.

        3. Nix says:

          I don’t actually see where that matters in the long term.

          What is the conversion rate on 2017 Ford F-150 Reservations?

          You might be confused by that question, because it is irrelevant to how many F150’s get sold this year, because Ford doesn’t have reservations for the F150.

          Well, the same goes for the Model 3 over the long term. Even if they burn through those reservations, it isn’t like that’s the end, and nobody else will want to buy one. At some point they will start to get more “Inventory” buyers, just like all other car makers. Buyers who go browsing cars and end up buying on that day, like other car makers.

          It is an interesting mental exercise. We could game out different factors like incentives going away, and the Model Y being revealed, and battery prices dropping faster than projected, etc. But over the long term I don’t expect TM3 sales to be based on hundreds of thousands sitting on wait lists.

        4. Rich says:

          When Tesla delivers 250K Model 3 in the USA by end of 2018, there will be an explosion in demand for the car. Neighbors, friends, relatives, and co-workers will be exposed to the “very cool” Model 3. They’ll all want one.

      2. ijonjack says:

        Build a nice Simple Pickup Truck On that same Model 3 Platform & Tesla will Never keep up Or ever fill buyer’s Demand !

        1. (⌐■_■) Trollnonymous says:

          I’m not a GM fan but if they put the Voltec drive train in a pickup, I just may convert……lol

  9. MTN Ranger says:

    Obviously a compliance car until proven otherwise!

    /s

    1. ijonjack says:

      Do U know what Planet Ur 0n?

      1. ffbj says:

        /s=sarcasm. A jovial response as this the usual dig on many evs.

      2. Mikael says:

        No, please tell-us. 😉

        /s = sarcasm

    2. Dj says:

      Well until it’s sold directly to consumers in every state it will be per many here I suppose 😀

      1. Pushmi-Pullyu says:

        Sadly, that seems to be true.

        Flying Spaghetti Monster save us from the EV purists who insist on living in that dream castle they’ve built in the clouds!

  10. Priusmaniac says:

    I would like to be the positive viewer here that think production numbers will be higher because things are getting into a situation where no one supplier will want to be that weakest link, so they will all end up over performing. Being the weakest link would be bad for image, bad for future delivery possibilities and simply bad for company feeling, so we will have much more than 80000 Model 3. The real number will be set by the Tesla workforce ability to assemble the delivered parts as fast as possible. Something Elon has been working hard to maximize by faster assembly rate and more teams.

    1. Roy_H says:

      Obviously Tesla is perfect! The ONLY reason they won’t make these production numbers is if supplier constrained.

      BS. The most likely thing to slow down the ramp rate is the discovery of problems, in building (some) but mostly in on-the-road testing. It usually takes 6 months of testing to iron out the major problems. They should only build 100 in June/July and then test the hell out of them and commit to high volume production January 2018. There is going to be a ton of recalls this way.

      1. floydboy says:

        If YOU say so.

    2. Kdawg says:

      They should hire Anne Robinson to send them on their way 😀

    3. Pushmi-Pullyu says:

      “…production numbers [could] be higher because things are getting into a situation where no one supplier will want to be that weakest link, so they will all end up over performing.”

      While it would be nice to think so, can you point to any case in history where this has happened with any product assembled from hundreds or thousands of parts? I’m guessing the answer is “no”.

      Random chance, Chaos math, and entropy all point in the direction of an almost inevitable delay. Realistically, I think the best we can hope for is for the delay to be only a few weeks, instead of a few or several months.

  11. evnow says:

    I’m assuming they will only make a few thousand this year – enough to clean out the employee/space x waiting list and may be west coast Tesla owners. Rest of us have to wait for ’18.

  12. Another (Euro) industrial point of view says:

    I was correct with the share capital increase announcement in Q1 2017 back in Sept. 2016 so will push my luck with this one as well:

    Below 10K Model 3 for 2017.

    Not that I believe they won’t make large numbers of them in 2018 but ordering parts and putting them together in large quantities for the first time does trigger all sorts of production glitches and Musk has always been a huge optimist (like me, I always multiply by 3 my own time estimation to achieve things).

  13. M3 - reserved says:

    Tesla hasn’t made anything large scale in volume so let’s see what they do. They shouldn’t have pulled an expert from Audi.

    They needed to pull a Toyota production manager for volume ramp up. Audi doesn’t make a 400k production car either.

    1. Nix says:

      Audi sold 340K units of the A4 last year (not even including the A5/S5/S4 variants). Close enough to 400K that it doesn’t matter. I’m not sure why people have to make up imagined Concerns.

      Why not just post “watch out for snakes!!”

      /sarc

      1. M3 Reserved. says:

        400k in single assembly line vs 6+ different lines is quite a different matter.

        The supply chain line and planning is exponentially large. And 340k vs 400k is huge. That’s Bolt’s entire annual production difference. People talk 1-2% supply miscalculation will cause issues; while you’re saying 20% no bid deal.

        Yeah, snakes!

        No matter, we’re first day instore west coast deposit holders.

        But to think it’s a small feat to ramp up this project even for highly experienced manufacturers, is a discredit to the amount of planning needed to pull it off.

        1. Nix says:

          “400k in single assembly line vs 6+ different lines is quite a different matter.”

          You are right. It will be MUCH more simple to just build 400K of one car, than 400K of multiple lines of cars. The former Audi head of manufacturing was in charge of A4/A5/Q5 production. Just having 1 car will be much more simple.

          “340k vs 400k is huge”

          No. Huge drama queen is the only huge I see.

    2. Tech01x says:

      Tesla already hired Gilbert Passin, a former Toyota production engineering general manager back in 2010.

      https://www.tesla.com/blog/tesla-hires-toyota-manufacturing-expert

      1. M3 Reserved. says:

        Missed that. That’s good they did that. 200k a year plant — high quality.

        Would be great to find person with experience on ramp up to Musk 400k annual on single line.

        1. Pushmi-Pullyu says:

          Don’t know why you keep saying “single line”. 400k cars per year almost certainly will be produced on multiple production lines, not just one, notwithstanding all of Elon’s talk about significantly speeding up the operation of production lines.

          1. M3 Reserved says:

            single location. From my understanding, there’s 1-2 other assembly plants that produces 400k vehicles in a single site.

            The logistics needed behind that is Herculean. For a company with production history of ~200k in its entire history, it’s looking to ramp up production too do that in 1 year.

            Then again, this is the guy who lands rockets on drone ships, so……

  14. Nix says:

    To put this in perspective, according to goodcarbadcar, the top seller in the Small And Midsize Luxury Car sales segment was the Mercedes-Benz C-Class at 77K units sold in the US total over the entire year.

    70-80K Tesla’s in 6 months would still be roughly double sales rate as the best selling car. The Model 3 would effectively debut as a market sector leader in their first 6 months of sales. Even if they hit only 40K in the last 6 months, they will be at the top of the segment in sales rate.

    1. unlucky says:

      I didn’t see any reason to think the Model 3 is a luxury car. What is the luxurious part?

      1. Nix says:

        Who says it won’t?

        1. unlucky says:

          Apparently I do.

          There is no reason to think it’ll be a luxury car.

          What is the luxurious part of it?

          1. Nix says:

            Do you think it will more closely resemble a base Kia, or an entry level luxury BMW, Volvo, Acura, MB C-class, etc?

            We will certainly see, but whether you like it or not, Tesla is squarely in the Luxury carmaker category, no matter what you whine about. And there is no reason to expect anything else from the TM3, which Tesla has already compared to the BMW 3-Series.

            We will see what luxury features it will have at the reveal.

      2. (⌐■_■) Trollnonymous says:

        I was thinking the same thing.

      3. Devin Serpa says:

        What makes the C-class a luxury car?

        1. Nix says:

          That’s my point.

          The same goes for various Jaguars, Acura’s, Volvo’s, Kia’s, Audi’s, etc that the automotive industry has put into the Luxury sales segment.

          Who is to say what category it will be put in? Well, it isn’t up to unlucky or me or anybody here.

          But the Model S and Model X have been put into the Luxury category. That makes it very likely that the Model 3 will be put in the “Entry level Luxury” category, along with a whole bunch of other entry level luxury cars. That’s the tradition.

          If somebody has anything to suggest otherwise, I’m open to see it.

        2. Rich says:

          The C-class has wood, leather, and polished metal nobs. Great fit and finish. Doesn’t that justify the extra $30K for the car? LOL

          My idea of luxury is fueling up in my garage while I sleep. Having the car drive me to work instead of having to drive it. Dropping me off at the door and parking itself. Throw in a S3XY look and speed matching a sports car. Add a pinch of great miles/kWh. Now that’s luxury. I’m looking forward to the Model 3.

          1. Devin Serpa says:

            Exactly!

          2. Koenigsegg says:

            Having a car drive you is not luxury. That is laziness and non worthiness of owning such a car. It’s also degrading being a reflection of your capabilities as a human being. Choosing not to drive when you are capable of driving.

            1. Rich says:

              “Having a car drive you is not luxury. That is laziness and non worthiness of owning such a car. It’s also degrading being a reflection of your capabilities as a human being.”

              Having a car perform the mind numbing task of commuting while I work isn’t laziness. My time is valuable and being able to work during my commute is a huge benefit. Gaining 1hr to 1.5hrs back in my day is worth more than leather seats and metal knobs. You’re point of view lacks depth.

      4. zzzzzzzzzz says:

        > I didn’t see any reason to think the Model 3 is a luxury car. What is the luxurious part?

        Price sticker 😉 Really, it is enough 😉 $42k is average entry-level luxury car price in the US according to KBB. Musk was talking about $42k average selling price, if average will be more, it will be even more into luxury category. Once you see the price, you can compare what luxury (or “luxury”) competing cars offer and choose what you want.

  15. Nix says:

    Wait, where did the trolls go who were so certain that we wouldn’t see the Model 3 until 2019?

    *laugh*

    1. zzzzzzzzzz says:

      Trolls do not exist in hopium induced alternate reality dreams.

  16. Loboc says:

    I’m really skeptical that Tesla can ramp that fast on 100% of the parts needed. If one single part has a defect on a single run it can put them back for a month or more.

    I’m with a few others here. If they hit 5-digit total production by 12/31/2017 it would be a win. If they only have employee cars by then, it will be a problem.

  17. David Murray says:

    On the other hand. They only need to sell about 40,000 of them this year to insure it is the #1 selling EV in the USA. At least compared to what the other EVs appear to be selling.

  18. BenG says:

    The “impossible” goals that lead to an “impossible” number of 76,000 produced in 2017 is exactly that: impossible.

    Far more likely is something like: late September to achieve a production rate of 1,000/week after initial problems with suppliers and production line are sorted. Maybe double that by late November and get it up to 3,000/week in late December excepting holidays, for total produced in 2017 of maybe 20,000, if they are lucky and good. I expect if things go well they’ll deliver 15,000 or so this year.

    Like someone said above I’ll consider any 5 digit number sold and delivered in 2017 to be a big success. If they deliver 50,000 I’ll be absolutely shocked.

  19. bro1999 says:

    Elon never seems to miss an opportunity to throw out the “production should go according to plan IF THE SUPPLIERS hold up their end of the bargain” line.

    Elon CYA’ing? Or planting the seed for an excuse if production doesn’t commence as scheduled?

    IIRC, Mary Barra or other GM brass never dropped hints that the Bolt’s launch relied on suppliers having all the parts ready. Every time someone asked about the Bolt’s launch schedule. GM responded “everything is going according to plan”, and one time they even responded things were slightly ahead of schedule.

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