Analyst Believes Tesla Is Definitely On Track For Model 3 Production In 2017

10 months ago by Eric Loveday 54

Tesla Model 3

Tesla Model 3

While some analysts like JP Morgan’s Adam Jonas think the Tesla Model 3 will be well behind schedule, others such as Jennifer Liang of Chinese research firm KGI, believe that the Model 3 is on track for deliveries to begin in the second half of 2017.

Model 3 makes an appearance at recent Tesla "Solar Roof" event

Model 3 makes an appearance at recent Tesla “Solar Roof” event

Liang wrote this in a recent note to investors:

“Versus supply chain management for Model S and X, where nearly all parts and components are shipped to Tesla’s Fremont factory in California for sub- and final assembly, Tesla has brought in two SIs (system integrators), located in Thailand and China, for various sub-assembly for Model 3.”

 “Its recent acquisition of Grohmann Engineering (DE), a specialist in automated manufacturing, is clearly another endeavor by Tesla to accelerate Model 3 production.”

Even though Liang believes that production of the Model 3 will begin later this year, she’s cautious in regards to volume. Liang seems to believe that total production for the Model 3 in 2017 will be well below Tesla’s expectations, but the 400,000 reservation backlog will provide Tesla with buyers for years to come, so she’s not concerned if the automaker is a bit low on output.

As always, there’s more than one way to view what’s going on at Tesla, and that is never is it more clear than when you compare the thoughts and predictions of one analyst to another.

For us, we would like to see more tangible evidence (or really any at all) of the production process for the Model 3 to declare with any confidence its volume arrival later in 2017.  But then again, who doesn’t? Tesla has announced there will be a Model 3 first delivery event, perhaps that is the start of the Model 3 information train?

Source: Street Insider

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54 responses to "Analyst Believes Tesla Is Definitely On Track For Model 3 Production In 2017"

  1. Ted D. says:

    Beautiful car & technology that will soon result in the I.C.E. to be placed the personal auto into the history books.

  2. ClarksonCote says:

    So a lot of the car will be made in China?

    1. Anon says:

      S. Korea, actually.

      1. jimjonjack&jill says:

        They make some Quality Things In Korea , China etc: Depending the the Product..ie: The Chevy aveo is an amazingly Good Car as I understand it….They have been putting out some Good Quality products ..Hyundai is a Great Example …

        1. ClarksonCote says:

          Well, the follow up story, coincidentally enough, says it is expected to be the most “American made” car in America, so I guess that answers my question! 🙂

          1. Marshal G says:

            I suspect it is measured by weight, so lots of small electronic gadgets made in china is outweighed by the steel and batteries made in America.

            1. Pushmi-Pullyu says:

              I read one claim that it was measured by cost of the parts/components, but I don’t know how much consistency there is, or isn’t, to how different studies count these things.

              1. Becker says:

                It’s measured by whatever makes the headline work. =)

        2. Usman says:

          Actually the real reason behind quality of products are the quality control, quality specifications outlined by the company and the quality regulations or competitiveness determine the quality of the manufactured products. In the US, there is a higher standard for quality.

          1. Paul Smith says:

            Tell that to a German, Japanese or Korean.

    2. georgeS says:

      “Tesla has brought in two SIs (system integrators), located in Thailand and China, for various sub-assembly for Model 3.”

      Maybe that’s the reason we haven’t seen an alpha test fleet. There’s 100 Model 3 alpha’s in China.

      1. Kdawg says:

        What happened to “making the machine that makes the machine”? What is it going to cost to ship these assemblies? Will this be cause logistic issues? What about Trump bashing Ford/GM/Carrier for outsourcing?

        (just stirring the pot.. 🙂 )
        [goes back to sipping coffee]

        1. SparkEV says:

          Machines that make machines got tired, and decided to strike. Here’s a video of their rebellion to work when commanded.

          1. ¯\_(ツ)_/¯ sven says:

            In hindsight, Hillary should have put this tech in the nation’s voting booths to win the election.

            /s

            1. floydboy says:

              Would only help if you needed the most votes to win, she already got that.

              1. ¯\_(ツ)_/¯ sven says:

                According to the Constitution, Hillary did need the “most votes” in those pesky swing states to win the election in the Electoral College.

                1. drpawansharma says:

                  Considering how she lost reliably democratic rust belt that was won comfortably by Obama, her loss is more about rejection of her candidature by good honest democratic voting public than any one else. Democrats were fools to astro turf the field in her favor and make a mockery of the primaries.

                  1. dsh says:

                    Here here. Well said, well said! A mockery indeed!

                2. Steven says:

                  Sadly, living in a “Red” town, in a “Red” county, in a swing state (that went “Red”) I can only apologize that I couldn’t convince more of my friends of the danger they so happily marched towards.

            2. SparkEV says:

              Dump’s team would’ve had the same, and they’d be doing this.

              Ad states “this was paid for by unemployed robots of america”

              1. ¯\_(ツ)_/¯ sven says:

                LOL!

    3. FutrureShock says:

      When Tesla’s new ‘2170’ battery cell will be added to its vehicles, which is expected to be in the second quarter for the Model 3, Tesla’s vehicles will become 95% made in the US and potentially become the “most American cars” in production according to the definition provided above.

      1. Kdawg says:

        Wasn’t that “stat” before we learned about these Chinese parts? (which, to be honest, don’t know the scope of)

    4. Rich says:

      As you’ve already pointed out in the article below, this article is lacking context. Another IEVs article puts the Model 3 at 95% Made In USA, which puts these system integrators at a combined total of 5%.

      http://insideevs.com/tesla-model3-expected-american-made-car-2017/

  3. Rich says:

    Between the roll out of the Bolt, the Model 3, and possibly a Leaf 2.0, 2017 should be a fun year for EVs.
    If Tesla is delivering 300 Model 3s in March 2017, that allows for 6 months of feedback and production line adjustments before starting production in Sept. Awesome!

  4. Chris O says:

    I agree with the last paragraph: analyst opinions = LOL, unless they can provide concrete evidence of progress or lack there of.

    1. DJ says:

      Seriously. At least the guy who didn’t think they would get it done cited actual reasons. Apparently this lady “feels” something…

      Here’s to hoping she’s right though.

    2. Pushmi-Pullyu says:

      Right. As someone who follows the “story” of Tesla Motors very closely, I almost always find what so-called “analysts” say to be more amusing than informative. So many of them get so many things so wrong!

      I don’t see any full report on Ms. Liang’s analysis, so I can’t say whether she got all her facts right or not. In the few quotes I see, both here and what appears to be the source for this InsideEVs article (link below), I see no factual errors. But as DJ already said, the comments reported from Ms. Liang seem to be more “feelings” than conclusions based on fact.

      http://www.streetinsider.com/Analyst+Comments/Tesla+(TSLA)+Going+All+Out+to+Hit+Model+3+Production+Goals+-+KGI/12377114.html

  5. Pet says:

    The Model 3 could easily by become the best selling cat in America in 2018. That will dethrone the long reigning toyota camry. If that happens it would be interesting.

    An electric car leapfrog.

    1. Pet says:

      Oops that should be, “best selling car”

      1. ¯\_(ツ)_/¯ sven says:

        It’s funny that someone whose screen name is Pet mistakenly typed cat in place of car. LOL! 😀

        1. I thought a Cat was a member if the Family, and Pet was something you do to it! :^)

    2. Pushmi-Pullyu says:

      “The Model 3 could easily by become the best selling cat in America in 2018. That will dethrone the long reigning toyota camry.”

      I guess you believe Tesla will achieve its stated goal of producing 400,000 units of the Model ≡ as early as 2018. For the sake of argument, let’s assume that is true. But the problem is that not all Tesla’s sales happen in the U.S., or even all of North America.

      If we assume that even 40% of Model ≡’s are sold overseas, that means the 400,000 figure shrinks to 240,000.

      388,616 units of the Camry were sold in the U.S. last year. That’s a bar that’s going to be very difficult for Tesla to get over with just Model ≡ sales in the U.S. alone!

      Oh, and as far as worldwide sales records, 1,339,024 units of the Toyota Corolla were sold in 2015.

      Let’s not get ahead of ourselves. I’m very gratified to see the ~400,000 paid reservations for the Model ≡. But the sustained market potential for that car has yet to be determined, Tesla has not yet demonstrated that it can ramp up production to anywhere near that level, and the market segment for PEVs is still less than 2%.

      I think Tesla has a real shot of growing to the size of, say, the Ford Motor Company. Growing to the size of Toyota… well, it’s certainly not impossible, but that will be a very difficult challenge.

      One of these years, PEV sales will finally take off in a big way, and will enter that classic “S” curve, the sustained exponential growth of market penetration during a disruptive tech revolution. Now that the Gigafactory 1 is finally producing battery cells, and other auto makers are making plans for their own large-scale battery factories, perhaps that will happen sometime in the next few years.

      But let’s not count our chickens before they’re hatched. The EV revolution has been stuck in the early adopter stage for many years, and it may remain there for a few or even several more.

      1. Being that Toyota is either: THE biggest Auto Maker, or among the Top 3, and is more than a Dozen years old, even in American Factory Production, what say we try out a comparison between Tesla Model 3, and… say, Mazda 3? Or Suzuki (not sure of what their most popular vehicle is), or Jaguar, or- more directly – their targeted competitor: BMW 3 Series, or, Audi 4’s?

        I don’t think it will be 5 more years before Tesla has Total Worldwide Production, that exceeds at lear 3-5 well known brands, and after production begins on Model Y, they will have further production ramp ups to deliver, for what many, including Elon, expect demand in the Million or more per year level!

        If he gets a good Pickup out in production by 2019, he will be on a very solid growth curve up, likely all in at over 1.5 to 2 Million units per year!

        Then, there is the Mini Bus, and Tesla Large Truck, that should likely be here by 2020!

        1. Rich says:

          Tesla is capital constrained. 500K vehicle battery capacity per $5 billion dollar Gigafactory. Figure in another $2 billion for the automotive production side. Even if Musk follows the roadmap of combining the Gigafactory with the automotive manufacturing side, it’s still in the ~$6 billion ballpark. Tesla doesn’t have the cash. Not even considering the profits generated by Model 3.
          400K vehicles x $42K avg price X 25% profit margin = $4.2 billion / yr (once 400K vehicles / yr is achieved)
          Another limitation is time. Each Gigafactory is a 5 year build time / ramp up.

          If the world is to replace 100% of all new car sales with EVs in the next 25 years, the world must start building 10 Gigafactories per year for the next 20 years. This is required to create enough batteries to supply ~90 million new car sales. The scale of the manufacturing base for new cars is staggering. Now project new car sales world wide in another 20 years. It’s easily in the 100 million / yr. range.

          OK, so there’s several factors that aren’t take into account. Tesla is only using 35GW of the Gigafactories 50GW battery capacity for autos. Battery capacity is increasing 5% year over year. Each would lower the total number of Gigafactories to something around ~120 Gigactories needed. This is still a huge investment in money and time. Given the political will of protecting Oil, it’s probably going to be 30+ years before gas powered auto manufacturing is replace.

  6. Fred says:

    Personally, I think Tesla should delay the model III, and make it the car to beat all cars. They will need to make something with much, much better specs than the Bolt. I’m thinking 270 mile EPA range standard(more on bigger battery). Sub 5,5 sec. 0-60mph. But more importantly, 250-350Kw rapid charge capability (With ultra rapid CCS charging popping it’s head up, Tesla SuperCharging will no longer be the king), and induction charging as at least an option. Tesla has set the bar higher, other manufacturers have jumped over the bar. They (Tesla) will need to step it up to stay ahead.

    1. floydboy says:

      NOPE!

    2. Rich says:

      “I’m thinking 270 mile EPA range standard” – Musk said the Model 3 will have a Minimum of 215 miles. We won’t know the range until the final Model 3 reveal. The reveal was targeted for Spring 2017. I’m guessing sometime in late Mar. or early April.

      “Sub 5,5 sec. 0-60mph” – again, this may already be the case. We won’t know for sure until the final reveal with all of these details.

      “250-350Kw rapid charge capability” – Musk tweeted recently that 350kW charge rate is for a childs toy. Hinting to a better rate than this.

    3. WadeTyhon says:

      If you are only talking performance wise, The Model 3 is already a better performing car than the Bolt EV. They definitely should not to delay to improve the specs.

      Size, tech and practicality wise, the Bolt appeals more to me but not as much to my wife. She will eventually be replacing her 2013 Volt with a new Volt, CPO Model S or Model 3.

      And if the average price of the car is about 41-42K, then it will be basically be in the same price range as the Bolt. If the Bolt is a success, then I guarantee the Model 3 will be success.

      1. What is the price of the Premium Bolt EV+CCS? Is that not $41,500-$42,000 as well?

    4. LOL says:

      More likely Tesla is capable of tipping 315 miles mark. As for acceleration, not all buyers crave 5.5 sec, guess many wuold trade off poorer acceleration for better mileage, say 7.5 sec with 330 miles of range.

      1. I was thinking they might be able to do that, with taller gears, which would slow down the launch some, but deliver more range!

        I wonder: would they be using different Performance Gears in the current Performance Editions of the Model S, and Model X, which is why they get better 0-60 times, but Less Ramge, or is the less range just because the car has bigger and heavier motors and uses more kWh/mile?

        1. BenG says:

          Oversize tires on the Performance models contribute to the lower mileage

    5. Pushmi-Pullyu says:

      “Personally, I think Tesla should delay the model III, and make it the car to beat all cars.”

      It’s really sad how often the fallacy of “The perfect driving out the good” crops up in comments posted to the Internet.

      Tesla is the one and only company that is actually pushing forward the EV revolution. For Tesla to delay anything longer than it absolutely has to, would only put off the day when EVs finally enter the sustained exponential sales growth that marks a disruptive tech revolution, and delay the date when the last gasmobile rolls off an assembly line somewhere in the world.

      1. ItsNotAboutTheMoney says:

        More importantly, the later the release, the tougher to succeed. Combination of competition and capital constraints.

  7. WadeTyhon says:

    I think they will be able to meet the deadline by the end of the year. Worst case scenario, Q1 2018.

    Even just a few dozen token deliveries in the first month will generate large amounts of positive press for Model 3, Bolt and by extension, all other EVs. I doubt that they are willing to go all the way until spring 2018 or later before a single delivery.

  8. ffbj says:

    The back half of 2017 is a pretty big space. I don’t see it being filled with Model 3’s either. Till then we will just have to find a way to get by.
    https://www.youtube.com/watch?v=Fp15kxAE3ig

    1. Well, it has been a while now, but I remember a story suggesting Elon has a production goal of 200,000 Model 3’s built and/or delivered in 2017, with a caveat that such numbers might be hard to make, but he is sure at least a 100,000 can be accomplished!

      If true, and at least that many Model 3’s can be delivered by then, Most of the current USA reservation backlog should be delivered by then, with maybe another 3 months to go before Canada and other Countries start getting theirs!

      If he makes it all the way to 200,000 by year end, I would suspect the current % of US deposits will be filled by year end!

      1. BenG says:

        There is no chance of Tesla delivering or building 200,000 Model 3s in 2017. And, very minuscule chance of building 100,000.

        It would be incredibly impressive if they built 30,000 this year and delivered 1/2 that.

  9. Pushmi-Pullyu says:

    “…Tesla has brought in two SIs (system integrators), located in Thailand and China, for various sub-assembly for Model 3.”

    It’s good that Tesla is taking positive steps toward getting the Model ≡ into production according to its aggressively accelerated schedule.

    However, let us not forget that it takes only one (1) single unique part for the Model ≡ that fails to be delivered on time, or one which fails to fit properly, or fails to work properly, to hold up the entire production. And that, EV fans, is why Elon said:

    “Now, will we actually be able to achieve volume production on July 1 next year? Of course, not. The reason is that even if 99% of the internally produced items and supplier items are available on July 1, we still cannot produce the car because you cannot produce a car that is missing 1% of its component.”

    And that’s why I am predicting that we will see only a token few Model ≡’s come off the assembly line at the end of this year, with volume production not to start until 1st quarter 2018.

    I am, of course, hoping Tesla will exceed my expectations! 🙂

    1. So, you are expecting it to take the 1% that might be delayed by 5-6 months, Without Elon realising he needs multiple and duplicated suppliers for each part, so that no individual part supplier can stop his lines?

      Of course, you also have road closures, bridge failures, teamsters strikes and longshoreman strikes, earthquakes, and more, that could interfere.

      However, I believe that there is a new Duck we are watching in the pond this time: out of site and under water, the duck is pedaling like mad against the current, and we just hear a few squawks from time to time!

  10. Loboc says:

    @Pushme
    “And that’s why I am predicting that we will see only a token few Model ≡’s come off the assembly line at the end of this year, with volume production not to start until 1st quarter 2018.”

    I agree. Given the past Tesla delivery track record, it is unlikely that 2017 will be the year of the Model 3.

  11. CDAVIS says:

    Luang quote: “…Tesla has brought in two SIs (system integrators), located in Thailand and China, for various sub-assembly for Model 3.”
    —-

    As in wiring-harness…

    Tesla Job Description: “Work closely with harness supplier engineers from concept to design release to ensure design for manufacturability and best practices.”
    https://www.tesla.com/careers/job/electrical-designengineerwireharnessintegration-24271?redirect=no

  12. In the end, if 10 newly built Model 3’s are the only cars they produce on the line on July 1, 2017, it would indicate that they have not quite reached ‘Production’ levels, but I bet Elon would be using that production line, and build sequence, quite some time before that Production Date, to confirm the line functions, for Beta+, or Production Intent Cars are built, for final things, like Crash Testing, fit & finish, teamwork flow, and the like!

    It might even be wise to do some 100 car build sprints, to test the line and process at high speeds, and take some extra time to review such vehicles fo all quality parameters, before committing to a continuous production speed flow at such rates!