Tesla To Deliver 83,000 Model 3 Sedans In 2017?

4 months ago by Steven Loveday 40

According to Teslanomics’ Ben Sullins and his “data diving” expertise, along with a hefty deal of research, Tesla will deliver about 83,000 Model 3 sedans in 2017.

Ben recounted CEO Elon Musk’s previous statements, pored over quarterly data, mapped out the Fremont factory’s production potential, and consulted numerous estimates and sources to come up with his estimate, which is on close to some previous conclusions – at least on the production side of things.

As most of us know, Sullins doesn’t base his information on an abundance of opinion, guesswork, or propaganda, but instead compiles and analyzes the most current, factual information he can find. Then he puts it all into easy-to-read charts and graphs to make it organized and accessible.

Tesla

Inside Tesla’s factory in Fremont, CA

When the Fremont factory was under General Motors’ and Toyota’s joint control, functioning as the NUMMI facility, it could produce a half-million vehicles per year. However, the plant was designed to build ICE cars.

To clarify details, Sullins touched base with industry analyst, Steve Funk, who believes that Tesla still has some work ahead of it to get to higher levels of automation, and faster production speeds. According to Funk, the Fremont factory is not unlike any other current automotive plant, although perhaps a bit behind for the time being.

In a perfect world, Tesla could pull off 200,000-250,000 vehicles a year on the second production line. The first line will be solely responsible for Model S and X vehicles. Tesla cut the number in half, saying it will make over 100,000 Model 3 sedans this year. This makes sense, since there will only be five to six months of production time.

NUMMI wasn’t sourcing an abundance of parts from an offsite source. Most traditional automakers tend to have everything they need onsite when producing vehicles at top production speeds. Tesla will be making batteries and other various parts at the Gigafactory, while producing cars in Fremont, and transporting said parts as the process unfolds. Looking at it this way makes the 83,000 estimate seem a bit steep.

It will be interesting to see what Tesla can truly pull off. Only time will tell.

Of note:  As a point of reference, when Tesla first confirmed the start of July production on the Model 3, and outlined volumes in February during its Q4 report, InsideEVs estimated 2017 sales of the Model 3 between 25,000-35,000 units.   Perhaps a friendly wager between us should be proposed?  …with us really, really hoping to lose.

Video Description via Teslanomics by Ben Sullins on YouTube:

Tesla is going to sell almost 83,000 Model 3’s in 2017 based on my forecast model.

Looking at the EV market, the Tesla Model 3 hits the mass market consumer. With an estimated base price of $35,000, maybe a little higher, the attainability of this electric vehicle reaches more prospective owners. In fact, there are already 400,000 reservations and deliveries are set to begin in July.

Tesla is projecting to produce “1,000 vehicles per week in July, 4,000 per week in August and 5,000 per week in September, before hitting the target of 10,000 vehicles per week sometime in 2018.” In 2018, the goal is to produce 400,000 vehicles.

Despite Tesla’s high hopes, industry analyst, Steve Funk, says it isn’t possible.

“All the same, Tesla has not yet achieved “alien dreadnought” in automobile manufacturing. While the process has become highly automated with the extensive use of robots, there are limits. Fremont is not much different from any other automobile manufacturing plant. If anything, it’s less efficient than most.” said Funk.

According to Funk, the paint shop and production line appear to be the bottlenecks.

“Because Tesla has not expanded the Fremont factory, it is reasonable to expect the two assembly lines have a nominal capacity similar to NUMMI. Here is the NUMMI capacity:

– Truck Line (Model S and X): nominal capacity 180,720 jobs/year (48 jph)

– Small Car Line (Model 3): nominal capacity 225,900 jobs/ year (60 jph)

From 2000 to 2009, NUMMI produced an average of 154,522 Tacomas on the Truck Line, less than the nominal capacity. Because the truck line is slower than the small car line, Tesla uses it for Model S/X production.

Tesla forecasts Model S/X production to be no more than 100,000 units in 2017. Presumably, this is demand constrained.

The small car line is faster and is slated to assemble the Model 3. The 225,900 capacity figure is based on two shifts with straight time.” Funk predicted.

Based on this, and my learnings from my recent trip to Fremont, I agree that this Tesla plant alone won’t get them to the huge number they’re projecting. In fact, Musk even stated that the Fremont plant is “bursting at the seams.” To meet their high projections, Tesla needs to give “serious consideration” to more factories – potentially as many as 20.

Considering these factors and my personal learnings, I am downgrading Tesla’s originally published estimate of around 100K Model 3’s in 2017 to around 83,000. I think the production lines will become automated in early September, and this is when they’ll see a big jump in efficiency.

Musk also talked about how Model 3 production is exponential instead of linear. Musk said: “Another thing I really want to emphasize is the production ramp tends to look like — is exponential. Ultimately it is an S-curve. An exponential goes to linear then goes to log. And it’s very difficult to predict exactly where that beginning part of the exponential and the S-curve fits in between quarterly reporting.” Based on this, once the equipment is installed, in both the Gigafactory and the production will grow exponentially.

Looking at the numbers more realistically, using a reasonable growth curve, Tesla will hit the 5,000 cars per week sometime in late October. By the end of the year, I’m estimating they’ll be at 6,000 per week. So, when you add the numbers, we’re at almost 83,000 by the end of 2017.

Source: Teslanomics via Teslarati

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40 responses to "Tesla To Deliver 83,000 Model 3 Sedans In 2017?"

  1. Ct200h says:

    Manufacturing 16000 vehicles a month on average?
    And delivering / selling all of them by December ?
    5 months ? 83,000 vehicles in addition to S and X ?

    That sounds about like getting a rocket come back down and land on a barge.

    1. SJC says:

      83,000 / 12 is under 7000 per month.

      1. Mikael says:

        Does this year have 19 months?

        1. Mark.ca says:

          “Does this year have 19 months?”
          Tesla is doing things close to the speed of light so time gets extended.
          I would call this target impossible…

        2. Nix says:

          Autopilot version 2.1 will have a “time travel” Easter egg in order to fit 19 months into the last 6 months of the year…..

          /sarc

      2. AlphaEdge says:

        In 2017!

      3. Yes, but 83000/5 months (since that is all that is left of this year when production starts) is = 16,600/month.

  2. DJ says:

    Just to add a meaningless comparison millions of spinners were sold in 2017 so I mean really the 83,000 is a pittance in comparison.

    P.S. I’ll believe it when I see it 😀

    1. Assaf says:

      Haha, +1.

      The honorable Mr. Sullins has probably never heard of how factory ramp-ups work.

      I’ve gone through one at Intel in 1999-2000. And Intel at the time already had 30 years’ experience doing that, down to near-perfection.

      The ramp-up is *very* gradual. And even before that, just the first few test units are scrutinized with a virtual microscope for weeks on end, before allowing the ramp-up to start.

      It may be that the Model 3’s seen rolling around the Bay Area are already part of this scrutiny process. Still leaves the quantity ramp-up period. And with cars, just making sure all the supply ducks are in order per the required quantity/quality…

      In short, forget it. If anyone is betting on 2017 numbers, I’d recommend betting on something less than half of this 83k figure.

    2. Nick says:

      Haha! Yea the factory used to produce cars, where as Tesla’s trying to build CARs… errr, wait.

      😀

  3. Bonaire says:

    Some tracking the parts-supply predict something like 25k in Q4 but hardly 83k for H2. That would be Ludicrous. But as with anything – let’s see.

    Model S deliveries should be lowered in H2 once Model 3 arrives. If you can get that much range in M3, hardly a need to spend nearly twice as much for a slightly bigger car.

  4. Ron M says:

    I’m betting Tesla will pull it off. It’s not only Musk who wants to see it happen it’s all the Tesla workers. When you have everyone working in sync good things will happen.

  5. Vexar says:

    I stick by my numbers. I can hope for 26k units for Q4, but July and August at 1000 units each month, and September at 2000, for a year-end total of 30k units. Tesla will be keen to maximize the federal refund program for its US customers. 83k in 2017 will not help that goal.

  6. F150 Brian says:

    My opinion is that producing that many units of a totally new model in such a short time is irresponsible from a business perspective.

    The risk of an unforeseen problem and the cost of fixing it in large volume would put the business at risk.

    Please just produce a reasonable amount and make sure the quality is there before ramping to whatever level the market can consume.

    1. Pushmi-Pullyu says:

      If Tesla wasn’t willing to take huge risks, to bet the entire company on a risky attempt put a new car model into production despite inadequate experience, then we never would have seen either the Tesla Roadster nor the Tesla Model S… and the EV revolution would be something we’d still be hoping to see, rather than experiencing.

      Probably someday, after it’s somewhat older, Tesla will settle down and become a conservative company like GM or Ford. But thank heaven that so far it’s been willing to “bet the farm”, repeatedly, on growing and making new models!

      With great risk comes great reward. — Thomas Jefferson

  7. randomhuman says:

    I don’t really think that Tesla can produce and deliver(!) 83000 Model 3 this year. I think they’re going to deliver between 30000-50000 Model 3. Still a big number. But we shouldn’t get over enthusiastic. Some little mistakes can always happen and then production line has to close for 2 weeks and the goals can not be achieved anymore. But I still hope the best for Tesla.

    1. Pluto says:

      I completely agree with you.

    2. Bonaire says:

      Care to guess on Model S given those Model 3 numbers? H2 for Model S is really a hard one to predict. I’m finding that a lot of 75 kWh MS and MX inventory will be made available in the summer and that Model 3 production throughput may or may not impact both production and demand scales (well, duh). If things are sluggish overall, could cause a stock meltdown to some degree which sours some buyers and it could snowball. We do know that some buyers certainly are able to buy their cars with TSLA stock “winnings” however, can that really continue forever? (ie. Ron Baron speculating $1000/sh by 2020)

  8. Mikael says:

    Anything above 20k would be awesome.

  9. Get Real says:

    I’m confident that Tesla will be in serious mass production of the Model 3 by the end of 2017 and will probably double its end of 2017 production rate in 2018 in order to maximize Tax credits and work through reservation backlog.

    1. Bonaire says:

      After backlog is run through – what is the quarterly sales rate of S/X/3 going forward from “end of backlog point”? Model 3 backlog is currently 14 months of $1000 fully refundable reservations. It does not mean there will be 500,000 new reservations/purchases per year once the backlog is burned down. Some are speculators wanting to scalp the first few out the door. Others are investors who want to help pump the stock. Others just threw down deposits to get in line and hold a spot for a while – might buy it, might not – it’s refundable! This level of car backlog hasn’t been done before and therefore very hard to believe 100%. Let’s say 30-40% are actually turned into sales – quite good, actually. Some predict less.

      1. Nix says:

        Considering that lots of car companies sell way more than 500K vehicles each year without a single reservation, I’m not sure if the number of reservations will have any correlation to future sales demand.

      2. Pushmi-Pullyu says:

        “Let’s say 30-40% are actually turned into sales – quite good, actually. Some predict less.”

        Hmmm no, that would be quite bad, actually. I’ve seen the Model S reservation cancellation rate cited at 25%. What leads you to guess the M3 cancellation rate will be so much higher?

        Of course the M3 is selling to a less expensive market segment, so we should expect some difference… altho not necessarily higher; it could be lower. There’s always the outside chance that Tesla drops the ball very badly and the M3 quickly gets a reputation for being a lemon, but otherwise it seems highly unlikely that the cancellation rate will be double or even more what it is for the MS.

        1. Asak says:

          There are more alternatives available now. With the Model S that was it for a long range EV at that time. Now you have the Chevy Bolt, soon the Nissan Leaf 2, Hyundai Kona. If people aren’t satisfied with the 3 for whatever reason they have plenty of other options. Also if the $35K turns out to be just a teaser, that could cost a lot of sales. If the EV rebate runs out, the car is instantly less affordable too.

          I think Tesla will be lucky to convert 50% of their deposits to sales.

          1. Nick says:

            Only the three has access to supercharging.

            That’s huge.

  10. Murrysville EV says:

    I just want to know when they’ll produce 61025 cars, because that’s my number. 🙂

    Actually, given Tesla’s statement that they will pre-build a small range of configurations, it will be very interesting to see how access to these vehicles unfolds. I assume it won’t be the Oklahoma Land Rush:

    https://en.wikipedia.org/wiki/Land_Rush_of_1889#/media/File:Oklahoma_Land_Rush.jpg

    1. Nix says:

      I disagree. A literal horse race to be the first to reach a bunch of Tesla’s spread out across the countryside sounds like a blast!!

      Heck, I’d plunk down $40K just to be part of that!!

      *grin*

      1. Pushmi-Pullyu says:

        Here’s hoping no “Sooner” would have snuck in the night before and nicked the one you had your eye on! 😀

  11. Nix says:

    I checked the SEC filings, and I was unable to find official guidance saying 100K TM3 deliveries in 2017 in the SEC filings. So I take with a grain of salt any prior statements by Tesla or Elon about numbers. I take them as aspirations, not actual SEC guidance. (I can’t wait for some troll who doesn’t understand the significance of official SEC guidance to misread what I’ve said there and twist it into something I didn’t say…)

    In fact, Tesla’s official SEC guidance is currently that they won’t commit to ANY number of deliveries until after they release their 2017 Q2 10-Q quarterly statement in about a month and a half.

    83K may be right. 100K may be right. 25K may be right. It is nearly impossible to say at this point with even a reasonable amount of confidence without any official guidance on delivery numbers. All we have for numbers at this point are optimistic aspirations, and not firm official guidance.

    So personally for my own sanity, I’ve decided from now until we get the official guidance, to turn a willfully blind eye to everything I’ve read from analysts, from Tesla, from pundits, and even all the stuff I’ve written myself.

    The official SEC guidance is near enough now that I just want to wait and see what the official guidance will be. THEN speculate wildly whether they can hit their numbers….

    *grin*

    1. Pushmi-Pullyu says:

      Thanks, Nix, for another authoritative post which cuts to the heart of the matter.

      I’ve always regarded the announced goal of 100,000-200,000 Model 3’s produced in 2017 to be aspirational rather than an actual prediction on the part of Tesla, just like the target date of July 1 for start of actual mass production. In fact, didn’t I see a recent statement from Elon or Tesla that has moved the goal posts on the latter to late July?

      1. Nix says:

        I’ve always understood the first week of July was the deadline for when the first batch of 1000 parts was supposed to arrive from all of Tesla’s suppliers.

        The biggest cravat has always been that some supplier will always be the last supplier to deliver parts.

        How that would translate into actual cars coming off the assembly line, through QA, through reworks, and delivered into the hands of the first customers is hard to predict. It would be amazing to see them going from first parts shipments arriving to first fully assembled cars delivered to employees in the same first week of July.

        There will definitely still be challenges than will need to be overcome, just like in every manufacturing business. Usually car makers don’t have so much attention focused on the sausage making.

  12. cab says:

    Seems like someone added an extra zero to their calculations…oops.

    On the off chance that wasn’t a math error…God help the service centers!

  13. Patrick says:

    I will put this random blogger up against your random YouTuber. Both claim to “use data” but come to very different results.
    Ben: 83k
    Pat: 25-50k
    http://www.carswithcords.net/2017/03/the-model-3-wont-ship-in-july-and-thats.html

  14. Roy_H says:

    Ben says “Tesla is projecting to produce “1,000 vehicles per week in July, 4,000 per week in August and 5,000 per week in September, before hitting the target of 10,000 vehicles per week sometime in 2018.” In 2018, the goal is to produce 400,000 vehicles.”

    Does anyone have a link to this statement by Tesla? I read 5000/wk by the end of the year with a slow ramp-up.

    How does Ben relate to the production lines previously installed by NUMII? I believe all the equipment was sold and the factory was virtually empty when Musk bought it. Ben seems to be under the impression that the old equipment is still there, just modified to manufacture Tesla products. I get this impression by his statements that the process is not up to modern standards and names the Model X & X as being built on the old truck line. Can anyone back these statements up?

    1. Pushmi-Pullyu says:

      Roy H asked:

      “How does Ben relate to the production lines previously installed by NUMII? I believe all the equipment was sold and the factory was virtually empty when Musk bought it. Ben seems to be under the impression that the old equipment is still there, just modified to manufacture Tesla products.”

      A good question. I don’t claim have a very informed opinion on that matter, but here’s what Wikipedia has to say:

      NUMMI auctioned off the press lines, robots and other equipment to Toyota’s other US factories while Tesla purchased over $17 million of manufacturing equipment and spare parts in 2011, at significant discounts compared to new equipment. Tesla bought $50 million worth of Schuler SMG hydraulic stamping press lines used from Detroit for $6 million, including shipping costs.

      The factory was about 10 times the size Tesla initially needed, and much of the 370-acre (16,000,000 sq ft; 1,500,000 m^2) site was unused in 2013, with most activity concentrated in the 5,500,000-square-foot (510,000 m^2) main building that does the final assembly of vehicles.

      Various parts of the NUMMI plant were planned to be modified to support Tesla vehicle production. For example, the passenger vehicle paint equipment was to be extensively modified through late 2011; converted from solvents to BASF water-based paint. Two paint lines (one car body, one component) were constructed from 2015.

      So, as I thought, a mix of old and new equipment. But that “old” equipment isn’t that old, compared to most auto assembly plants. From my admittedly limited knowledge of the situation, it seems that Ben Sullins is being unduly negative in his description. It’s not like other auto makers replace all their assembly line equipment every year, or even every decade.

      * * * * *

      Roy H continued:

      “I get this impression by his statements that the process is not up to modern standards and names the Model X & X as being built on the old truck line. Can anyone back these statements up?”

      It’s the first I’ve read/heard of two production lines, one for cars and one for trucks, inside the former NUMMI plant. I see no reason to doubt that, but it’s difficult to believe that with all the new equipment Tesla installed, that the Fremont plant would still be limited by the physical speed of the old NUMMI lines. Doubly so with Elon talking about speeding up the lines to 5x or 10x the current speed!

      As far as being “not up to modern standards”, I wonder if Mr. Sullins is falling into the same fallacy as all too many so-called “analysts” who compare the number of Tesla employees at the Fremont plant vs. the number of cars produced, and conclude that Tesla is hopelessly inefficient and outdated. The reality is that Tesla does much more in-house parts manufacturing and sub-assembly work than other auto makers. If you’d add in the number of workers employed at the suppliers other auto makers use for their parts and sub-assemblies, I’m sure that their ratios of workers-to-finished-cars would be much closer to Tesla’s ratio than it appears from the Fremont statistics alone.

    2. needa says:

      Here is Elon’s statement.
      ““So when we place parts orders with our suppliers, we’ve told them 1000 a week in July, 2000 a week in August, and 4000 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.””

  15. Pushmi-Pullyu says:

    “According to Teslanomics’ Ben Sullins […], Tesla will deliver about 83,000 Model 3 sedans in 2017.”

    -vs.-

    “…InsideEVs estimated 2017 sales of the Model 3 between 25,000-35,000 units.”

    Yeah. If we were betting, I’d take the “under” on that 83,000 estimate. And very much hope that I’d lose that bet!

    Go Tesla!

    1. leafowner says:

      Agree – I’d take the under as well. My bet is they finish around 45k for the year.

      The Model 3 still has an excellent chance of being the #1 selling EV in the US this year regardless – which would be an amazing feat.

  16. Pushmi-Pullyu says:

    Elon Musk said:

    “An exponential goes to linear then goes to log.”

    Well, we can say one thing with certainty: Elon Musk isn’t a mathematician! The only way an exponential “goes to linear” is if the exponent is exactly 1.

    1. Doggydogworld says:

      He’s saying the exponent changes over time. It starts out >1 (exponential growth) then declines to 1 (linear) then falls below 1 (log).

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