Concerns Over Delayed Launch of Tesla Gen 3 Arise As Tesla Continues To Seek Gigafactory Partner

MAY 13 2014 BY ERIC LOVEDAY 29

Tesla Model S

Tesla Model S

Tesla Motors has not yet secure a partner for its battery giga factory.  Or, at least Tesla is not willing to divulge details on that aspect of the giga factory.

But as the days continue to pass with no official partner noted, concerns over the arrival of Tesla’s Gen 3 (formerly known as the Model E) mount.

Without the Gigafactory many believe that Tesla Motors can’t deliver Gen 3 at the previously announced price point of $35,000.  Furthermore, the giga factory will be necessary to provide cells for perhaps 100,000-plus Gen 3s per year.

Without the giga factory, there may be no timely release of Gen 3, at least according to some analysts.

As Morgan Stanley wrote in a note on Tesla:

“If six months pass without measurable progress on the factory, must investors push back expectations for Gen 3 launch, or worse?”

Is gen 3 entirely dependent on the giga factory?  If so, what if Tesla Motors can’t secure a partner to the commitment level they are looking for?

Source: Quartz

Categories: Tesla

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29 Comments on "Concerns Over Delayed Launch of Tesla Gen 3 Arise As Tesla Continues To Seek Gigafactory Partner"

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There would seem to be umpteen ways in which Tesla could scale back without compromising their mission.

Pace some who seem to think that Musk is infallible, he is merely in the same ball park as every other engineering genius.

Typically he has over-promised and underdelivered, with vehicles arriving late and costing more than he reckoned.

That’s OK, that is the way of the world, and he has to keep momentum and if that involves optimistic forecasts, that is fine.

Will it really be a disaster if the Gen III is a year late and costs, initially, $45k or so?

Not really, and that does not compromise the eventual outcome.

Panasonic can source batteries in volume and at good cost, even if more expensively than Tesla hope.

“Overpromised and under delivered”? He prom

“Overpromised”? Tesla promised a $50K Model S -> originally delivered exactly as promised. “And under delivered”? -> the Model S continues to be given accolades as the best car ever designed. You must be shorting the stock to say these things.

In fact, based on Tesla stock’s six fold rise in 2013, few seemed to doubt Tesla’s ability to deliver on the Gen III promise then. That was before the term “gigafactory” was even conceived and know one knew how Tesla would achieve this. Why the doubt now? It is strategic that Tesla neither announces where or with whom the factory will be created, until the ground is broken. Since Tesla is discussing potentially multiple partners and sites, an undetermined $5 billion deal offers huge leverage in the negotiations. And for those that believe the partner risk is too large for someone to come forward, consider their lost opportunity of giving up a 50% market share opportunity in one deal. Don’t be surprised if Tesla stock rises another 50% during 2014.

Yeah, he kind of has. Look, I’m a big fan, and I think his accomplishments are the stuff of legend. He is simply the best tech CEO out there by a country mile. And so, saying that a guy like this has “underdelivered” sounds ridiculous. He has vastly overdelivered on what any sane, well-informed person could possibly expect. Unfortunately, our dear Elon has promised even more than what he has accomplished. The cars are more expensive than originally promised (100K and 50K respectively for the Roadster and Model S), the Model X is way late, the Falcon Heavy has not yet launched (original date was early 2013), etc. I am not sure why, having done so much, Musk promises even more. Maybe he is an incurable optimist. Maybe it’s his way of applying pressure to himself and his team. Maybe it’s because the vision in his mind’s eye is so clear that he has trouble grasping the myriad tiny details that must be taken care of for it to become reality in the hands of his brilliant yet overworked staff. Maybe it’s all of these things. But, for whatever reason, the rule with Musk is to always take him seriously,… Read more »

I think over-promising is one of the marks of a genius. People who change the world don’t present reasonable plans and timetables.

The cold, stark and unenlightened financial world frowns on such things, but it does seem to be the case.

This is crazy talk.

Tesla can launch Gen 3 without the gigafactory.

If you figure that Model S/X will push 100K units/yr at that time, they’ll need 8.5GWh/yr of cells. Its likely Tesla could produce 100K Gen 3 cars using 6GWh/yr of cells. This is based on Tesla’s own expectations on battery manufacturing – 15GWh/yr of cells manufactured off-site and made into modules and packs at the GF. Tesla would just have to find somewhere else (temporarily) to make the cells into finished packs for the cars.

Now, it may not please Wall St or customers if Tesla can only fulfill demand for 100K cars if the demand is 500K cars per year. But to go as far as saying they cant launch Gen 3 w/o the GF is crazy.

Tesla’s share price assumes not only Gen 3 success, but Gen 4 as well. So yes, this is indeed a very important factor for investors. Simply launching the Gen 3 with moderate success isn’t good enough.

He can launch it but he can’t make 200K of them without the GF. Without scale, per unit cost will be high and gross margins low or zero.

He needs the GF. IMHO, he rushed the announcement. He did that because the stock recovered and it was an excellent opportunity to get capital. The timing was not perfect though. That’s why there is a bit of a gap now.

Elon will deliver, maybe late, but he will find a way to build that factory, I am 100% certain. Those cheap battery packs will make a huge difference for Model S, X, C? and for Solar City, we just need to be patient…

This is just rumor mongering. Tesla is unwilling to divulge more details, so we are dipping into groundless speculation.

Tesla did say they were breaking ground on one site next month during the earnings release call. They also said that they are keen to get it done in time to match the factory expansion and was willing to spend extra to make that happen because the costs of not matching the factory expansion was much higher. Therefore, why the warrantless idle speculation?

+1

They are after schedule with the ramp up and the Model X too so there is really no need to get the battery factory up and running before mid 2018 or 2019 when the “Model E” will be arriving.

Tesla has abandoned “Model E” trademark.

So Gen3 sedan will be named something else.

That is exactly why I wrote “Model E” since it’s now nameless.

NO company is going to officially sign on until the parameters of the deal are fully fleshed out.

Panasonic LOI is the first step. LOI from Hitachi and/or others is next step.

Then a preliminary agreement or memoranda of understanding between Tesla and economic development agency of State where GF will be built.

Once these dozen or so moving parts have all preliminary agreements and everyone understands their role and the role of others then hard signed contracts can begin.

Panasonic is not going to sign binding contracts without knowing the specifics of what is being offered to Tesla by the host State etc etc etc.

In ways relating to news release, I wish Tesla were actually more like a regular old car company. The “love me, she loves me not” stuff is getting really old.

Gosh, short attention span and you fatigue easily… Changing the world is a MARTHON. Keep up or go home. 😉

In addition Tesla stock was up today! Yay!!

It serves no purpose to badger TM over their GF… It will be built when it is the proper time and place.

What could make or break Tesla’s plans is if some of the other main car companies get out of their 80 mile range EV building spree. Such as if Nissian and BMW start coming out with 200 mile range EV’s then Tesla should hit the panic button. In that if Tesla keeps making half promises it could bite them in the future.

A example of a half promise is when they said they were going to have a $49000 dollar car but it turns out to be a $70,000 car. Tesla could fix this with the model S if they come out with a 110 kilowatt battery back to replace the 85 kilowatt pack and the 85 kilowatt moves down to were the 60 was at and the 60 kilowatt battery back replaces the 40 killwatt battery pack that they dropped for the $49000 dollar Tesla model S.

But as of now the biggest danger is if the other car makers double their range.

The reality is only 4$ of Model S buyers wanted the after federal tax credit $50k version. It is now $63,500 after federal tax credit for the 60kWh version.

The reality of the global battery market is that the legacy auto makers CAN’T offer double the range AND sell in volume. They would need their own GF.

And they CAN’T double the range of the BEVs AND sell them profitable without their own GF.

They chances of them doing that within the next five years approaches zero.

BTW the legacy auto makers will also need a Supercharger network of their own to offer a similar value proposition.

Nissan right now does have their own battery factory that is a sleeping giant. BMW does seem to be fairly aggressive when it comes to selling EV’s in that they did host local EV events. So they most likely have a large source of batteries that they could build a 150 mile EV with.

The supercharger network is something frequently overlooked. A 200 mile EV is worthless for longer trips if it doesn’t have a network to support it. CHAdeMO at this point simply isn’t enough to handle the larger packs (too low power). We’ll see about CCS.

Without 30% cheaper battery, Tesla will make massive losses with its Gen 3 cars when they sell those at the promised prices. Bankruptcy is very likely. It will also bleed on the charging networks.
At the same time, partners are afraid to fork over money for gigafactory, when they see the tepid demand for these cars.

The minimum is 30% cheaper with the GF opens. Tesla has recently talked to the mining companies and they believe savings will exceed 30% by 2017 and 40% by 2020.

Tesla will make at least 15% operation profit on Gen3. Gen3 will offer 80% of the benefits of Model S at 50% of the price. Demand will exceed capacity. Bankruptcy for GM is very likely, after all they are simply in between bankruptcies.

With increased cash blow will be increased charging networks. Demand is so robust Panasonic has already signed LOI and has multiple working groups of lawyers, engineers, and manufacturing techs working out the details for the GF.

What tepid demand?!? Every car is spoken for before it starts production! There is no inventory, and they are still ramping up production!

I think that Tesla will be the first to have a Graphene and CNT capacitor based car. It will be very unwise from Panasonic not to be in if that happens. It also makes perfect since since these capacitors are much cheaper to make and Elon was going to do his PhD in the subject so he knows all too well about it. So the Gen 3 is a perfect window for that. Just imagine a 200 miles plus car that charges in 3 minutes and cost $35k. Who else will be able to do that?

http://cleantechnica.com/2014/05/12/new-graphene-carbon-nanotube-supercapacitor/

Just remember that this link is from google. God knows what else these scientists already have for military applications.