Morgan Stanley Predicts Very Low Tesla Model 3 Deliveries In 2017

5 months ago by Eric Loveday 100

Red Tesla Model 3

How low can you go?

Tesla says the figure will be substantial, Morgan Stanley predicts otherwise.

Tesla Model 3

Tesla Model 3

In a note to investors, Adam Jonas from Morgan Stanley wrote (via Electrek):

“Following 1Q results, we have updated our model and now have a higher estimate of OP loss in 2017 and 2018. Following these adjustments (mainly higher R&D, SG&A and the impact of higher capex), we now expect Tesla to remain loss-making on a US GAAP basis until late 2019.

Our estimate of cash burn for 2017 widens to $3.1 billion from $2.3 billion previously, taking our forecast of gross cash to under $1 billion by the end of 2018. By itself, these changes to our model would have taken our price target to $292. Rolling forward the starting point of our DCF of the core business to May 1st (from Jan 1st) was an equal offset. Our price target thus remains unchanged at $305, or roughly 6% downside from the current stock price.”

Jonas warns investors that Model 3 deliveries are likely to be lower than Tesla’s forecast in 2017 and 2018. Tesla says that sales of the Model 3 should be in the 5-digit range for 2017 and 6-digit range for 2018, Jonas meanwhile disagrees. According to Jonas, Tesla will deliver no real volume of Model 3s in 2017.

Here’s Jonas’ statement of the Model 3:

“Model 3 expectations appear to have recovered substantially over the last 4 months. Earlier this year investor expectations for Model 3 hit a trough with most investors we spoke with at that time expecting zero deliveries of the model during 2017 A series of subsequent reiterations from management and the spotting of release candidates testing on public roads have increased expectations of timing and volume significantly.

Although we cannot quantify what the market expectation is at this point, we believe our forecast of 2k Model 3 deliveries this year is substantially below current market expectations. Looking to 2018, we believe our 90k volume forecast is also far below Street expectations, possibly one-half or one-third market expectations for Model 3 volume next year.”

Those figures are not even in the same ballpark as Tesla’s projections:

“Simultaneously, preparations at our production facilities are on track to support the ramp of Model 3 production to 5,000 vehicles per week at some point in 2017, and to 10,000 vehicles per week at some point in 2018.”

Our own predictions here at InsideEVs, from Tesla’s original Q4 report (in February) that touched on production for 2017, pegged actual deliveries between 25,000-35,000 this year – so the range estimate in the industry is clearly fairly wide.

Clearly the Model 3 and its roll-out will be one of the top stories for the second half of 2017.

Via Electrek

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100 responses to "Morgan Stanley Predicts Very Low Tesla Model 3 Deliveries In 2017"

  1. Vexar says:

    Well shoot, they already made 100 of them and shipped them to Ohio for testing. Adam Jonas either doesn’t read InsideEVs,com, or his basis of fact is being completely overlooked here. Is there news of suppliers pulling out? Is he “optimistic” about the UAW forces interfering and decimating production process (as they are known for doing)?

    1. Lawrence says:

      5 digits equals less than 100,000. Seems to be a middle ground between fans and skeptics. I’d call he projections sound.

      1. Pushmi-Pullyu says:

        You didn’t read the article closely enough. Tesla is predicting 5-digit production and sales. By contrast, the article says “According to Jonas, Tesla will deliver no real volume of Model 3s in 2017.”

    2. BenG says:

      They have made zero production Model 3s so far.

      The “release candidates” they are testing now may be close to production cars, but they are not the real thing yet.

      If testing goes well, maybe Tesla will start up production soon.

    3. Bret says:

      I was going to say this too Vexar.

      Over a hundred of the Model 3 release candidates are obviously rolling off the line for testing, two months ahead of the launch. The giga-factory is spitting out 2170 batteries in volume and there is plenty of capital to support the launch.

      Since I’ve seen two of these types of doom and gloom articles quoting Jonas in the past two days, I suspect Morgan Stanley and their customers are sitting on a lot of underwater Tesla shorts.

      1. Vexar says:

        That’s provocative. I do wonder if you’re right! Somebody has to have those accounts, sure, but are investor analysts that lacking in integrity to sell-out to corporate interests?

        1. Bret says:

          I believe the analysts at investment banks support the corporate mission above all else. Maybe, I’m just cynical, but they definitely have a purpose that benefits their employers. Otherwise, the investment banks would just follow the analysts that already work in the industry.

        2. Pushmi-Pullyu says:

          “…are investor analysts that lacking in integrity to sell-out to corporate interests?”

          I don’t understand your question. Who do you think these self-appointed “analysts” work for? If there was any selling out, it happened when they took the job!

          That’s not to say you can’t get good personal financial advice, if you’re willing to pay for the service. But if a financial “analyst” is publicly offering “advice” for free, it’s for the benefit of those who pay his salary, and not for the benefit of the small investor!

  2. Brian says:

    Wait, they seriously think only 2k model 3s will be delivered this year?? If that happens Tesla will be in serious trouble.

    1. SparkEV says:

      Tesla is always late. I expect them to ship ZERO Tesla 3 in 2017. If they ship even one, that’s beyond the expectation of most people who’s bothered to research Tesla’s track record. Tesla is making lots of noise, but I’d rather have them take the time to get it right and be late than rush with poor product.

      But Tesla’s initial quality on launch has always been poor, so even late and poor initial quality is expected. If the doors don’t literally fall off (ok if it opens and closes mysteriously or fail to open), that’s about what to expect from Tesla. However, they will fix the problems and get better.

      1. Nix says:

        Tesla “always” late? Yes, Tesla has a record of being late in the past. But “always” isn’t accurate either.

        Gigafactory 2170 battery production — on time.

        Powerwall2 production — on time.

        Powerpack production — on time.

        Major installs of grid level Powerpack installations — on time.

        Solar Panel production — on time.

        Solar Roof — On track for meeting production. (so-called “delay” for 2 additional designs is complete BS. Tesla always said they would have a staggered ramp up)

        1. SparkEV says:

          None of those are as complex as cars. When it comes to cars, Tesla is ALWAYS late and poor initial quality. Expecting to be otherwise for Tesla 3 is setting up for disappointment. To paraphrase George the Texan village idiot, “fool me once shame on you, fool me twice… you can’t get fooled again.”

          1. Paul Smith says:

            Could be they learned from past experience and will prove to be your disappointment when they produce a great car on time. Of course if ANY small adjustment has to be made (which is normal for any company) you will jump all over it with an ‘I told you so’ because you’re a negative dork who has achieved nothing in life.

      2. Alonso Perez says:

        There is zero chance of zero deliveries. At a minimum, if everything goes wrong, they will deliver a few hundred cars.

        However this is a much simpler car than the X or S. The doors are conventional, for example, and there are fewer features all around. No real unknowns here.

        So I would not be surprised if they did 10K to 20K. I would bet on at least 10K.

      3. Pushmi-Pullyu says:

        SparkEV said:

        “If they ship even one, that’s beyond the expectation of most people who’s bothered to research Tesla’s track record.”

        Hmmm, no, I’d say that’s just you and some Tesla bashers.

        “‘When the facts change, I change my mind,’ John Maynard Keynes once observed in a debate. ‘What do you do, sir?’ Why, sir, they take no notice of changed facts and so are untroubled by such questions.” — Rex Murphy

        Tesla is quite visibly and very publicly demonstrating that, this time, it is very serious about starting production on time, or at worst with as little delay as possible. Predicting Tesla will be at least 6 months late — which is what you’re predicting, Sparky — seems unduly pessimistic.

        I’m sure all the Usual Suspects here — including you, Sparky — remember seeing (for example) these two widely discussed InsideEVs reports, showing how aggressively Tesla is moving to ensure Model 3 production starts on time:

        From 4 months ago:
        http://insideevs.com/tesla-confirms-cancellation-model-3-supply-order-suppliers-technical-standards/

        From 1 month ago:
        http://insideevs.com/suppliers-pressured-by-tesla-to-steer-clear-of-bmw-mercedes-benz/

    2. sven says:

      Among analysts, Jonas is considered to be a Tesla super bull.

      1. Chris O says:

        So? At the end of the day these people are about money. Pump and dump, distort and short. The money is in volatility, stability doesn’t work. That’s where people like Jonas come in.

        Looks like with stock values at a stratospheric $300+ pump and dump has gone just about as far as it will go, so now it’s time to make more money by the distort and short strategy and Mr. Jonas is right on it.

        The one thing you will never get from these people is objective facts. That would only make for stable stock prices and there just isn’t any money in that.

    3. Nix says:

      That’s why they are abandoning their previous 2K forecast. I agree that their statement isn’t exactly clear about this, bat that is what they are trying to say here:

      “we believe our forecast of 2k Model 3 deliveries this year is substantially below current market expectations.”

      That quote is them saying that their old 2k number is way too low, and they know it.

      This sentence is them throwing in the towel, and admitting they aren’t going to even try to put an exact target range anymore:

      “Although we cannot quantify what the market expectation is at this point”

      1. bro1999 says:

        Has Tesla given guidance for total 2017 deliveries yet?

        1. Nix says:

          The TARGETS (please go read the definition of “target”, it is not the same as “promise”) are 1K/week in July+August, ramping up to 2K/week in Sept. and continuing to ramp up to 5K/week by December.

          The theoretical max would be around 80K if everything went perfect, and there is a constant smooth ramp-up rate (source: electrek — ibid). Obviously there will be some delays, as Tesla has already stated are likely/inevitable. Even just averaging 1K/week for the rest of 2017 and entirely missing both the 2K and 5K ramp-ups would still be around 25K units. 20K even if they have more than a month of production delays AND miss every ramp-up target. Even if they have 2 months of delays before the first units come out, and the 2k ramp-up is pushed back 2 months, and the 5k ramp doesn’t happen until next year, that is still around 25K units.

          (editorial — I personally would consider any of those scenarios to still be a “successful” ramp-up, and anything over 40K I would personally consider as wildly successful. Under 10K I would personally consider a huge failure.)

          Tesla announced that they would provide a year-end target range for Model S + Model X + Model 3 total sales around the time they report Q2 earnings.

          1. Nix says:

            To be clear, all those numbers are assembly line production numbers, not delivered and fully completed sales.

            If Tesla hits their Model 3 5K/wk sales target in December, only a fraction would actually get delivered. That could mean somewhere around a 20K difference between production numbers and deliveries by the end of 2017.

      2. Doggydogworld says:

        Nix – “That quote is them saying that their old 2k number is way too low, and they know it.”

        You misread it. That’s analyst-speak for “today’s stock price assumes Tesla will deliver 25x as many Model 3s as we forecast”.

        Jonas didn’t change his forecast. At least not yet.

  3. Benedictus says:

    This guy is just trying to bring the stock down, so he can pick up some for cheap at the end of the day.

    1. SparkEV says:

      Or he’s trying to tone down the irrational exuberance of Tesla stock prices.

      1. Pushmi-Pullyu says:

        There seems to be an inexplicable tendency, by those who talk about Tesla’s finances, to confuse the performance of Tesla, the company, with the performance of TSLA, the stock.

        You’re suggesting this is intentional? Perhaps, but personally I see no value in it.

        A Morgan Stanley financial forecast could say, for example: “While Tesla is making great efforts to start production on its Model 3 at or near the target date of July 1, and will likely produce the car in a volume of five figures this year, nonetheless the stock remains substantially overvalued, and we cannot recommend buying until the price drops substantially.”

        See? No need to give an unrealistically low estimate of Model 3 production, while still warning against buying an overvalued stock. And that would give the impression that this MS “analyst” actually knows what he’s talking about, rather than appearing clueless and/or making a rather transparent attempt to manipulate the stock price.

    2. agzand says:

      Even in today’s watered down regulation he cannot do that in Morgan Stanley. He will be fired immediately if he trade Tesla shares after before or after making recommendation on the stock.

      1. Mark.ca says:

        You have to be a very naive person to believe that. It was not long ago that these big trading institutions were issuing sell signals on stocks they were accumulating…good times may come again…very soon.

      2. Pushmi-Pullyu says:

        agzand said:

        “He will be fired immediately if he trade Tesla shares after before or after making recommendation on the stock.”

        Ummm. Nobody is suggesting Jonas will personally go out and buy or sell TSLA stock today or tomorrow. Large investment firms have much more sophisticated, much harder to detect methods of manipulating stock prices. This “Jonas” guy is most likely acting as the mouthpiece for some investors or some companies who are planning on making an investment (long or short) in TSLA within the next few days.

        Perhaps you’re in denial about how commonplace financial manipulations are, and how the “one-percenters” control financial institutions to divert wealth to themselves.

        It’s financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls “pump and dump,” defined as “artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price,” then profit more on the downside by short-selling. “This practice is illegal under securities law, yet it is particularly common,” and in today’s volatile markets likely ongoing daily.

        Full article here:
        http://www.thirdworldtraveler.com/Banks/ManipulationHowMarketsWork.html

  4. ffbj says:

    That is the number, a few thousand, that Jonas has been sticking too for months.
    Jonas buy the Tesla story, just not the logistics of it’s implementation.

  5. Pushmi-Pullyu says:

    A few months ago, I was predicting that Tesla would produce only a token number of Model 3’s at the very end of the year.

    But with all the news that we’ve seen since then, my prediction looks unrealistically pessimistic. Heck, Tesla has already had more than 100 pre-production units made. So any problems with suppliers should have been identified, and hopefully dealt with.

    By all accounts, Tesla is trying very hard indeed to make sure its production starts with little or no delay later this year, and will ramp up swiftly.

    I don’t understand what’s going on with Morgan Stanley. They previously were underwriters for a new Tesla stock offering, yet this is at least the second time within the last few months that they’ve issued surprisingly pessimistic forecasts of Tesla’s performance.

    The only rational reason I can see for MS lowballing their Tesla rating is the hope that they’ll drive down the stock price (which seems to be more and more inflated every week), either in the hope they can buy up some before the stock goes up again, or because MS (or its shell companies) are short-selling Tesla stock… or both.

    But in light of recent news, predicting that “Tesla will deliver no real volume of Model 3s in 2017” seems astonishing; either astonishingly ignorant or astonishingly pessimistic. In either case, it certainly does not reflect well on Morgan Stanley’s reputation.

    1. ¯\_(ツ)_/¯ sven says:

      Or he’s astonishingly correct. Time will tell.

    2. georgeS says:

      PMPU,
      I tend to agree with you. I thought maybe 500 or some low number for 2016….especially in the light that we were seeing so few cars on the road.

      But this last article yesterday about 100 appearing in ohio caught me off guard.

      Also, as Nix keeps pointing out these cars are coming off a finished production line. …and it could be that Tesla has been testing them a lot more than we surmise based on scant sightings (again a Nix speculation).

      Now let’s assume that Tesla had way more test rigs going than is common place in the industry. Heck it’s possible they have had a whole power train …or multiple power trains set up in labs running 24 hours a day Logging years of endurance testing already. It’s common place to do such a thing but if tesla got an early start then the power train could be completely proven at this point.

      So my fairly useless prediction is that they are further along than we thought.

      1. Arun Jayaseelan says:

        I remember seeing some video where they were showing The Model s being tested inside a large warehouse space. Being all electric allows them to test inside closed spaces.
        Just imagine… you can have a large warehouse space with traffic cones with the model 3 release candidate autonomously running around in loops for many hours.

      2. Nix says:

        “Nix keeps pointing out these cars are coming off a finished production line. …and it could be that Tesla has been testing them a lot more than we surmise based on scant sightings (again a Nix speculation).”

        To be accurate, I’m saying that Tesla is sending cars down what will be their production assembly line, but I’m not saying that every single step at every station is 100% finished and finalized and ready for production. They are clearly still in testing, with unit testing of individual stations having started in October.

        They began building cars on their production assembly line back in Feb, with the production paint booth. That isn’t to say that every single station was absolutely complete, and that there still might have been some steps not being done with full automation at the level they plan for in July.

        Keep in mind that even the July production won’t be done using the full and complete level of automation that Tesla has planned for in the future. (AKA “alien dreadnought”)

        Automation on the Tesla assembly lines (including Model S and X) is an ever-evolving thing. Elon describes this initial version of the Model 3 assembly line as “alien dreadnought 0.5”, and they will continue to install more and more robots well after Model 3 full production begins.

        That means that some steps that were done manually on the Feb. version of the Model 3 Production assembly line will be done by robots in the future. We will keep installing more and more robots long past the point where they deliver cars to customers this year.

        So I wouldn’t use the term “finished”, even though they indeed have a functioning production assembly line. We will continue to see new robots being delivered and the assembly line further automated for likely more than a year after they put out production cars from their current assembly line.

        http://www.businessinsider.com/elon-musk-tesla-factory-alien-dreadnought-2016-10

        __________________________-

        Also, keep in mind that stamping isn’t part of the assembly line, and isn’t included in my comments about the status about the assembly line itself. Stamping dept. produces parts that get stocked on the assembly line prior to assembly, just like every other part from every other part maker. The final stamping equipment wasn’t ready when Tesla began building cars on their production assembly line in Feb. Cars were built using the 300 car’s worth of pre-production parts ordered from suppliers last summer, and body parts that were not stamped on the final production stamping equipment.

        I don’t want to leave people with the impression that everything is complete. There is still a ton of work being done and a lot of tuning to the assembly line they will need to complete by July. But they are very, very much past the point of completely hand-building cars one at a time. Which is what some people keep claiming.

        1. Pushmi-Pullyu says:

          I have this overwhelming urge to kidnap Nix and subject him to “enhanced interrogation” until he reveals what surely must be a very large number of insider sources of information! (Or maybe he’s a 7th dan Google-Fu black belt.)

          First we’ll try the soft cushions; if that doesn’t work, we’ll subject him to the comfy chair!

          Confess! Confess! 😉

          https://www.youtube.com/watch?v=XnS49c9KZw8

    3. JeremyK says:

      They might have identified fit/finish problems with supplier components, but until they rack up substantial road miles on these test vehicles, they won’t really know if they have design issues or not. This is the risk of rushing/skipping validation.

    4. BenG says:

      Just because a few hundred pre-production vehicles have been made doesn’t mean problems with parts/suppliers have been identified and corrected. The pre-production vehicles did not use all production parts from all suppliers, IINM. And testing isn’t complete on those pre-production cars, so how in the world can you assume they have identified and fixed parts and supplier issues?

      Testing could and probably will reveal issues that need correction. And as Tesla prepares to begin production in the near future we will see whether or not their suppliers can in fact supply the parts on time in the requested volume. As Musk said, it only takes one supplier slipping up to throw a wrench in things, and then your down to using essentially custom-built parts to put together your first production vehicles … which situation is why the Model X was only produced in a trickle the first few months.

      1. Pushmi-Pullyu says:

        You explain very well my own reasoning when I was formerly predicting that Tesla would only manage to produce a token few Model 3’s at the end of the year.

        But since then, Tesla has stated that it will produce any missing parts in-house. That goes a long way to mitigating the problem of “the chain is only as strong as its weakest link.”

        Now, that doesn’t eliminate the problem entirely, as there are certain parts which Tesla simply can’t make on its own. Computer chips would be one example; I’m sure others can think of other examples.

        But if Tesla assembled those 100+ pre-production cars in February, then it will have at least 4 months to identify and correct problems before the target date of July 1.

        And please note that nowhere did I claim that Tesla is going to start production promptly on July 1. Nor did I claim that Tesla will achieve its target production of ~100,000 (or even 200,000) Model 3’s for the year. To repeat, what I said was:

        “Tesla is trying very hard indeed to make sure its production starts with little or no delay later this year, and will ramp up swiftly.”

        As I said: Trying very hard. I made no claims that Tesla will actually achieve either goal. But I think predicting a delay of 4-5 months before production even starts, as Jonas appears to be predicting, is not any more realistic than predicting Tesla will start full production promptly on July 1.

  6. JR says:

    I hope nobody listen to these guys, and keep there shares, everybody knows that around new release of a new model there will always be fluctuations in the share price, they just what the upper hand now to buy some cheaper shares witch they will sell after the release where the value will boom, until it will find its realistic value.

  7. Pete S says:

    It’s May of 2017 and model 3 is not even released yet so isn’t it obvious there won’t be that many shipments during 2017.

    I can’t believe Morgan Stanley gets paid (alot too) to make these predictions.

    1. Nick says:

      Yep, they should be payed alittle for this work. 😀

      (Should be “a lot” above)

    2. Nix says:

      Pete — The Model 3 was released on Mar 31, 2016, with 2 demo cars being used to provide rides to customers at the release event.

      They had to have drivetrains and bodies sufficiently tested and developed to reliably provide demo run after demo run for hours. We don’t know when those drivetrains and bodies were built, or when they began testing, because it was all done in secret. A ton of folks even claimed that Tesla would only have computer renderings at that release event.

      That was over a year ago.

      1. Pushmi-Pullyu says:

        I’m not sure, I had to read it twice, but I think Pete S intended his first sentence to be read ironically. If so, then it would have helped if he had included a “/sarcasm” tag.

  8. Mister G says:

    WALL street professionals are all scammers…it is all about them making money off the hard work of working class people.

  9. pjwood1 says:

    All I see is $305, or other price targets down to the dollar. Jonas is using discounted cash flows in his modeling. He’s putting real expected “CF’s” atop a capitalization rate, or multiplied by an assumed P/E ratio. To get anywhere near $305, even using forward P/E’s, is to be selecting what I’d estimate are some crazy numbers.

    Tesla’s value may be predicated on market share growth, rather than earnings. In which case, cash flow analysis may be getting him nowhere.

    1. Nix says:

      I still remember back in 2013 when TLA was around $100/share and Dougherty & Co put out a $300/share future valuation when the Model 3 went into production. Everybody laughed at them and the shorters were busy saying that Tesla had no profits and were going to close the doors when they run out of cash any day.

      Now TSLA is right at their target. Dougherty & Co got it right. All the naysayers got it wrong. Currently they have a “buy” rating on TSLA with a target price of $375.

      https://www.streetinsider.com/Analyst+Comments/UPDATE%3A+Tesla+Motors+%28TSLA%29+Might+Ultimately+be+Worth+%24300%3B+Dougherty+Raises+PT+to+%24200/8507540.html

  10. William says:

    Adam Jonas has been throwing shade on Tesla in the past, this is just more of the same. Tesla has had delays before, but I think there is little chance that Tesla over promises and under delivers on the Model 3. If a supplier throws a monkey wrench and botches the production timeline of the Model 3, then MS and Jonas will be spot on in their estimates. I seriously doubt this chain of events will come to pass.

    1. Vexar says:

      Tesla has supplier redundancy, though. It would have to be multiple suppliers on the same part throwing wrenches. Tesla is taking a page out of the SpaceX playbook about redundant systems, only this is about suppliers being “a system.” When I advised the Daugherty Group back in 2012, I said “they will deliver, it won’t be on time, but it will be a marvel.” It’s 2017; Tesla has learned lessons about timeliness and about suppliers. Also, this isn’t the Model X, is a famously complex machine that also had supplier problems.

  11. Taylor S Marks says:

    My most pessimistic prediction is that by August 18th (just over 3 months from now), Tesla will have already produced 2000 Model 3s.

    Also, if production ends up being as low as Morgan Stanley is saying, they won’t even fulfill employee orders this year.

    1. F150 Brian says:

      Production is not relevant.

      Even sales to Tesla employees are not relevant, as we all know this is how final testing is being done.

      Sales to the general public are the meaningful measure. These will be fairly low this year (I, like all of you, have no idea how many).

      That does not preclude several hundred thousand sales next year – that is simply constrained by resources to supply, build and ship them.

  12. Chris O says:

    Do these people worry at all about their reputations or are predictions that are nowhere near actual numbers quickly forgotten?

    Remember that name: Adam Jonas and let this story serve as a reminder of the reliability of financial pundits if it turns out he is off by an order of magnitude or so as I expect.

    1. JR says:

      Well it looks like it is working for Morgan Stanley, shares are dropping in value today, this looks to me like organised legal theft!
      somebody is in panic, and Morgan Stanley will get there profit!

  13. GrokGrok says:

    However one comes down on the issue of numbers shipped this year, it would be better to take it slowly upon release. Work out initial quality problems and manufacturing issues, then be able to go flat out in producing vehicles. The $7500 federal tax credit is a more significant chunk of the Model 3’s value, so it would be good to be able to ship as many vehicles as possible the quarter Tesla hits 200,000 cumulative U.S. sales, and in the quarters immediately thereafter, while a portion of the credit is still available. Better that they are at the full 5,000 vehicles by that point, rather than still ramping up.

    1. Nix says:

      Keep in mind that the Trump tax reform plan currently under consideration in the House, is to wipe out most tax deductions and lower tax rates.

      If the Trump tax plan is passed, I don’t see any chance at all that the federal tax credit will survive a Trump tax reform. They can pass this tax reform through reconciliation without needing a single vote from the minority party in the House or Senate.

  14. Someone out there says:

    I think 2k this year is too low, the 25-30k estimate seems far more reasonable. Now it’s very possible of course given Tesla’s track record that something happens that will significantly delay the 3 but I think Elon is desperate to get the car out there at any price somewhere near this July. Ramp up could be much slower than anticipated though, I doubt Tesla will be making 500k cars per year before 2020.

  15. Mikael says:

    I am hoping for/expecting 10k produced this year, anything above that I will see as a nice bonus.

    It would be very foolish to bet against Tesla hitting six digit M3 sales in 2018 though.

    1. BenG says:

      That’s about where I am too.

    2. Nix says:

      I did some quick and dirty math a little while ago, and even at just 1K and 2K a week, the numbers really add up quickly by the end of the year.

      10,000 would be averaging around 400 cars a week for half a year.

      1. Mikael says:

        “Just” 2k per week would be higher than they currently are doing for the S and X combined after years of production.

        The Model 3 is a different vehicle and they are a lot better prepared and more experienced now. But I prefer to be happily surprised if they do better than 3 months serious production with an average of 1k per week.

        1. Jason says:

          Model S/X are significantly more expensive vehicles, production is more likely tuned to demand than what could actually be produced. There is an expectation of huge volumes of sales for Model 3 (especially based on 400k+ reservations), so manufacturing capability will be determined accordingly.

          The biggest risk is what happens once those reservations are fulfilled, will the be enough ongoing demand?

          Even if they were one month delayed and made 1 Model 3 per hour, that is still 3,600 production. Provided they start manufacturing in July or August, seems pretty unrealistic they would only make 1 Model 3 per hour.

        2. Nix says:

          Mikael,

          Yes, the Model 3 is a much higher volume vehicle than the Model S and X combined. Which is why the assembly line for the Model 3 is being built for much higher volume.

          It shouldn’t be surprising that a higher volume car will be produced in higher volumes than a lower volume car. BMW isn’t capped on how many BMW 3-Series cars they can make, based upon the low volume of 7-Series cars they build.

  16. DJ says:

    This must mean MS is a bunch of shorters! Only reason to say this!

    *sarcasm*

    1. Nix says:

      Morgan Stanley actually makes a ton of money off of TSLA shorters, by lending out their shares to shorters. The more demand for shares, the higher the interest rate they collect.

      So yes, MS has a financial interest in people shorting TSLA.

  17. HVACman says:

    Bolt EV roll out history:

    1/16 – Pre-production IVER Bolts test-driven by journalists at Vegas on a controlled course.

    3/16 – Orion plant begins production-intent Bolt production on the main assembly line.

    Spring 2016 – numerous spy-shots of Bolt’s around Michigan and around the country.

    summer 2016 – Production Bolt EVs test-driven by journalists on long-range drives from Monterey to Santa Barbara.

    October 2016 – final production version Bolts begin rolling off Orion assembly line.

    Thanksgiving 2016 – first retail Bolts delivered to first retail owners.

    Dec. 2016 – California retail Bolt deliveries begin.

    Jan 2017 – IEV’s reports 579 Bolt EV’s sold in 2016

    Assuming that the Model 3 development will be – in July – where the Bolt development was in March 2016 – Does anyone here really believe the Model 3 retail sales will be significant in 2017? If so, why?

    1. Nix says:

      Why do you believe that GM is somehow the Gold Standard of manufacturing? They aren’t. This meme is dumb and boring and has already been debunked endlessly. Let it die.

      1. Raymond Ramirez says:

        No, GM has improved over the “Old GM” (before 2009). It is easier to predict and trust GM production dates because they have done it before on many other cars, not just the Chevy Bolt EV. But TM has failed its predictions TWICE: for the Model S and for the Model X. The third time will not be the “charm”.

      2. (⌐■_■) Trollnonymous says:

        They’re the Gold Standard of BK and Bailouts.

      3. Spider-Dan says:

        Why do you believe that Tesla – who delivered their last car TWO YEARS behind schedule – has somehow magically become the gold standard for auto development?

        1. Nix says:

          Dan – you’ve got it backwards. I didn’t say that.

          I’m not the one saying that whatever Tesla does, no other company can do any better. That’s what the OP was saying about GM, as if no other company can do anything different than GM.

          1. Spider-Dan says:

            Right, but Tesla’s track record is FAR WORSE than GM’s in this regard. So you are essentially saying that – absent any real-world evidence – Tesla will immediately jump from one of the worst automakers in meeting timelines to a market leader.

    2. Bret says:

      Does anyone here really believe the Model 3 retail sales will be significant in 2017? If so, why?

      Yes, I absolutely believe M3 retail sales will significant in 2017 and here’s why.

      Never in the history of the automobile has there been 400K deposits for pre-orders taken. So, unlike Nissan, GM, BMW and others, Tesla already has massive demand. All they have to do is to deliver the supply. Can you imagine if GM had 400K deposits for the Bolt? They wouldn’t be predicting 30-50K Bolts per year.

      1. Bret says:

        Even if Tesla has some glitches or gets off to a slow start, Model 3s will be roaring off the line in 2017.

    3. HVACman says:

      Thanks everyone. Glad to hear everyone’s opinions and their rationale. I have bookmarked this thread and will re-visit it at the end of 2017 to see who was closer to the mark.

      1. you betcha says:

        My sentiments exactly. A follow-up on this thread in January to examine the year-end results, and again in April to examine the 1Q2018 results should clearly show who was right and who was wrong.

        Anyone who wants to invest real money in their opinions has the option to buy or short stock.

        I’m guessing, but not gambling, that Morgan Stanley is closer to the truth on this than the current market’s enthusiastic projections.

    4. Jason says:

      The reservations is the biggest difference in this case, Tesla had a lot riding on this and being late will not be an acceptable situation.

      Model S/X, high cost, limited numbers, new products that really haven’t been done before as an EV. Not critical, people will be prepared to wait, or if you miss one or two sales, you’ll pick them up next time.

      Model 3 is a culmination of learnings, so should be better able to hit the target. Price point is more fickle, if you lose this customer they won’t be back for several years as they will have invested in something else.

      If there were only 20k – 50k reservations then I think the situation might be different, but 400k has really put the spot light on Tesla.
      The other thing to consider, no one has been able to configure their Model 3 yet, we haven’t even seen pricing. What happens to the plan if everyone basically wants AWD because they know how much improvement it makes on the Model S/X? Now you have a situation where they are only going to make RWD and there isn’t much market for that. It sort of surprises me that the Model 3 pricing isn’t already visible on the Tesla website so people can start to see how much it will cost, what the options are, etc. One and a bit months out, that is a bit of a lack, all we know is the base model will be US$35k, nothing about options, nothing about costs. Hope that comes out soon.

    5. Pushmi-Pullyu says:

      HVACman said:

      “Does anyone here really believe the Model 3 retail sales will be significant in 2017? If so, why?”

      Let me turn that question around for you:

      Does anyone here really believe that Tesla is using the same cautious, extended approach which GM uses, thoroughly testing a new model before production? If so, why?

      I think there is a surfeit of very solid evidence that Tesla is absolutely not taking the slow-and-careful approach to putting a new model into production; the approach GM uses to maximize reliability.

      Please note I’m not saying that Tesla shouldn’t do that; merely that it doesn’t.

  18. agzand says:

    I am comparing Model 3 and Model X development time frame. I would say Model 3 is a bit ahead of Model X at the same time of the year in 2015. Tesla delivered few Model Xs in 2015. However, it is well known that they had a lot of issues with the Albatross doors. Model 3 won’t have these issues. On the other hand, Model 3 is an entirely new platform, unlike Model X which is a jacked up Model S. Typically a new platform takes much longer development time. The drive train, suspension, battery etc. all need much longer rigorous testing. So my gut feeling is that eventually it will take longer for Tesla to put everything together for their new car. Therefore I think Morgan Stanley’s estimate is realistic. I just can’t imaging they go from 0 to 60k in a few months.

    1. Nix says:

      Tesla has entirely revamped their supply chain management and contracting since the Model X. They are no longer simply taking the word of supplier’s Sales Managers that production is on target.

      Tesla now goes straight to the factory floor and works directly with the employees building the parts to ensure that progress is actually on target. And their contracts now allow them to fire suppliers long before they actually fail to deliver at the last minute. Tesla has already fired suppliers for failing to be on track for production.

      I think it is a mistake to try and divine Model 3 deliveries based upon the much higher priced, much lower volume Model X. That’s like predicting BMW 3-Series numbers, using 7-Series production numbers.

      1. agzand says:

        Tesla is a fringe player in supplier eyes. The suppliers are honed to perfection by companies like GM and Toyota, who demand components for millions on vehicles on time and at cutthroat prices. The notion that Tesla can change anything among suppliers is a fantasy by Elon Musk to justify their delayed launch of Model X and put the blame on others. So, no, I don’t believe Tesla can speed up or improve supply chain for automobile manufacturing. It will still take the same time as it took in 2015 to get the parts in order for Model 3.

        1. Nix says:

          Actually, when Tesla first launched the Model S, they couldn’t even get tier 1 suppliers to submit bids. They were stuck with tier 3 suppliers before they launched. All the folks like you said that Tesla would never build the Model S. That it was vaporware, that they could never ramp past 50 units/week, that nobody would spend 100K on an electric golf cart, etc.

          But now tier 1 suppliers are actually BEGGING Tesla for their business. They all want to brag about being a supplier to Tesla. Tesla even had to write into their contracts that they couldn’t brag about it until after the TM3 went into production. One supplier even lost their contract because they wanted to publicize their Tesla contracts too early. One supplier even bought a whole bunch of Model S cars in and attempt to get business from Tesla.

          The number of parts in the order doesn’t matter. Tier 1 suppliers simply really want to be able to brag about being a Tesla suppler.

          The entire situation with suppliers has completely changed since the Model S was first launched, and has even changed since the low volume Model X was launched.

          1. agzand says:

            That doesn’t change a thing about what I said. Tesla has to submit the design on time to get their components, like anybody else. If they try to be too cute about it and rush thing up, it will probably backfire and they will end up with design changes that could push things further back.

            1. Nix says:

              Actually, what I posted is EXACTLY how Tesla has already managed to change supply lines, and exactly how Tesla will get special treatment that other companies don’t normally get.

              1) Tesla folks right on factory floors monitoring progress. That reduces typical slides in schedules.

              2) Tighter contracts that allow Tesla to fire suppliers for missing progress milestones. That gives Tesla more power and leverage to get their parts on time than typical contracts

              3) Even more important, suppliers are bending over backwards to supply Tesla. This is a sign that they will bend over backwards to make tighter deadlines than normal.

              It is all in my posts above. Your failure to understand the repercussions of those facts is not my problem.

        2. Pushmi-Pullyu says:

          agzand said:

          “The notion that Tesla can change anything among suppliers is a fantasy by Elon Musk to justify their delayed launch of Model X and put the blame on others.”

          Hmmmm, no, it looks like the person who’s ignoring reality here… is you. The development of the Model X is different from development of the Model 3 in several fundamental ways, not the least of which is that Tesla’s entire business now depends on the Model 3, in a way that it never has and never will for the Model X.

          Reports seem to be pretty clear that the situation regarding Tesla and its suppliers has changed significantly. Your refusal to recognize that reality doesn’t actually change that reality.

  19. Is that analyst going to loose his job when Tesla shows him wrong? Are investors backing off now because of that analytic “masterpiece”?

    Yeah, I really should stop reading articles that contain the word “analyst”.

    1. ¯\_(ツ)_/¯ sven says:

      You also should stop playing fast and loose with English grammar.

  20. Nix says:

    Keep in mind that Jonas/Morgan Stanley once said that Tesla wouldn’t start volume Model 3 production until 2019, and then would only build about 1K units per week until ramping up higher in 2020.

    Some folks here treated that like it was handed down to Moses on gold tablets. Yet even Jonas/Morgan Stanley have had to admit those 2019/2020 predictions were wildly wrong.

    Fool me once, can’t get fooled again.

  21. Marshal says:

    I will troll him mercilessly when Tesla produces more than 2,000 M3 this year. The “Jonas Limit” will be the new “Spiegel Bottom.”

    1. Raymond Ramirez says:

      What if the final number is just 1,990? That is below your “prediction”, too. remember the valid numbers are for “Sold” cars, not just produced. You can make 1,000 Christmas cakes in a day, but that isn’t worth anything unless you sell all of them before December 25th.

      1. Pushmi-Pullyu says:

        Given that Tesla has set a goal (not a “promise”) of 100,000-200,000 Model 3 units produced by the end of 2017, only 2000 seems a relatively safe bet. In fact, I’d call anything less than 10,000 a rather timid prediction.

        Sure, we can all paint scenarios where multiple things go horribly wrong for Tesla, a perfect storm of Murphy’s Law. But only 10,000 units produced by the end of 2017 would be a full order of magnitude less than Tesla’s goal of 100,000+ units. So anything less than 10,000 produced (not necessarily all sold) by the end of 2017, seems unduly pessimistic to me.

        Just my (hopefully informed) guess, of course. My crystal ball doesn’t work any better than that of any other informed person… altho I hope and believe it’s more reliable in this case than the one used by Mr. Jonas!

    2. Spider-Dan says:

      Let’s suppose Tesla more than doubles Jonas’ estimate of 2000 deliveries by shipping 5000 MIIIs in 2017.

      Last year, Elon Musk said that Tesla should be producing 100,000-200,000 Model IIIs in the second half of 2017; let’s split the difference and call it 150k.

      5000 MIII deliveries in 2017 would mean that while Tesla delivered 2.5 times as many as Jonas predicted, they delivered 1/30th as many as their CEO forecast.

  22. Loboc says:

    Based on past performance, I agree with MS. My prediction is that zero customer Model 3s will be delivered in 2017 and that very few will be delivered before second quarter 2018. I also don’t believe that Tesla will be in the “5000/week” production range until 2019 or later.

    All I have to go on is past performance. Which is basically all anyone has to go on whilst trying to predict what Tesla will or will not do.

    I have no desire to be in a stock like TSLA, so, I really don’t have any skin in this game.

    1. Spider-Dan says:

      Remember: Elon Musk’s forecast was for 100,000 to 200,000 Model IIIs in 2017.

      Completely unhinged disconnect from reality.

    2. Nix says:

      “All I have to go on is past performance. Which is basically all anyone has to go on whilst trying to predict what Tesla will or will not do.”

      If you don’t actually read up on what Tesla is doing different with the Model 3 vs. the Model S or Model X, you might only have past performance to go on.

      Luckily we have this thing called the internet, so it is actually pretty easy to go and learn what Tesla is doing different compared to when they built their own first full production of their own, and what is different for the Model 3.

      I bet you could even come up with at least 5 major differences yourself if you put even minimal effort into it.

    3. Jason says:

      Actually, based on past performance has to include lots of factors. One factor is that almost every product development has poor performance the first few times, but over time that performance improves. Not too​ mention companies would still in business of their future generations of products didn’t learn and improve from their past generation of products. Pretty sure Apple I was built in a garage, Apple II would have been lot different design and production to Apple Mac, but look at them now, churning out iPhone upgrades year on year with barely a hitch. It you took past performance as the metric then iPhones wouldn’t be produced as well as they are because Apple I and Apple II were built in garages and basically low production.

  23. Rob says:

    This sounds like “alternative facts” to me.

  24. Four Electrics says:

    The fact that Tesla has Audi talent replacing the bozos formerly in charge of production is a good sign. I predict roughly a thousand non-Tesla-employee deliveries this year. That will be an impressive accomplishment for Tesla. Meanwhile, I wonder when the front door on my X will fail again, or whether it will fail to start, as it did last week.

    1. Pushmi-Pullyu says:

      Since your “Model X” is imaginary, you can simply imagine that it’s fixed.

      But then, of course, you couldn’t use it as an excuse for your serial Tesla bashing.

  25. Just_Chris says:

    Cash burn rate is often a good indicator of how much a company is investing in something. Tesla is spending much more now than it did prior to S and X production so I would expect to see a faster ramp up than for the S and X. They also have a 400k reservation list. Those aren’t guaranteed sales but it at least give an idea of demand. That will make life much easier. No one is signing a supply deal for the model 3 thinking that they are only going to be supplying enough parts for 10-20k cars in the next 18 months. That will get rid of a lot of problems with the supply chain.

    It’s May, I would expect them to be making the first few cars on the production line now or tempering expectation if they can’t. You can only assume that since there has been no announced delay that they are on track for the first deliveries. With that in mind I think 2k cars this year is fairly unjustified as they should make that easily but it all hinges on a few good months or one big delay.

    If it takes them 7 or 8 months to get to 2000 cars a month like it did with the X and S then they are unlikely to make 2000 cars this year and 100,000 cars next year. If they hit their stride early they’ll be delivering more than 2000 cars a month before the end of 2017. There is no telling which way it will go at this stage. If they can pull off 1 month at next years average the production rate they could deliver 8000 models 3’s in December.

    Who knows, things haven’t really changed much from the model S first deliveries just the number have got much bigger.

  26. M3 reserved says:

    Tesla is entering a segment that’s a lot less forgiving than the luxury eye-candy segment. It’s chief competitor is the standard bearer of BMW 3 series. However, it’s also targeting the loaded Camry and Lexus buyers too — which is why the 3 needs to have similar fit and finish quality along with available and responsive service centers to support subsequent calls.

    This is no small feat, and the prior car releases don’t show a great record. Now it’s true the incremental learning should have occurred and Tesla has every incentive to get volume up, capital behind it, and expertise from other pouched execs. I do hope that they will deliver ours by end of 2017.

    With Launch Day in store West coast reservations, we shall be the early DISCERNING adopters to 3–for better or worse–and that exact target audience that will either make Tesla a huge American success story or giant sized Solyndra

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