Analyst: Tesla Model 3 Production Can Easily Hit 8,000 Per Week

AUG 16 2018 BY DOMENICK YONEY 72

Yes, Model 3 production is still ramping.

With all the turmoil surrounding the efforts of Tesla CEO Elon Musk to take the company private,  the intense scrutiny that production of the Model 3 has been under for months seems to have lapsed a bit. Still, the number of cars coming off the line seems to be continuing to grow even while out of the spotlight, according to an Evercore ISI analyst George Galliers, who just toured the factory.

In a note, Galliers said, “Tesla seems well on the way to achieving a steady weekly production rate of 5,000 to 6,000 units per week.” Good news, right? Well, it gets better. He continues,

We are incrementally positive on Tesla following our visit. We have confidence in their production. We did not see anything to suggest that Model 3 cannot reach 6k units per week, and 7k to 8k with very little incremental capital expenditure.

The electric automaker had hit a then-record high of 5,000 copies of the mid-sized sedan during the last week of June. Though expectations were that the stock would rise after reaching that threshold, it did not, as many were convinced the output was limited to a one-time all-out effort. It was only later in August, during the financial call with analysts that Musk revealed production had hit that same mark in at least two weeks in July. This, along with other positives from that call, brought share price up significantly ahead of the “going private” tweet that then spurred on a short-lived price spike.

The production goal for the Tesla Model 3 for 2019 is 10,000 units per week. That translates into an annual rate of 520,000 of the all-electric car. By comparison — an imperfect one, since it isn’t sold in Europe — the Toyota Camry moved 462,318 units in the United Staes and China last year, or 8,891 units per week.

Source: CNBC

Categories: Tesla

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72 Comments on "Analyst: Tesla Model 3 Production Can Easily Hit 8,000 Per Week"

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Ron M

If the delivery problems have really been corrected I think Tesla will sell 30,000 TM3’s in the month of August.

Doggydogworld

They’re working on delivery bottlenecks, but ran into another problem, causing a rash of last minute VIN reassignments. I expect ~15k in August.

Will

My projection for next moth were 14k-17k

Mark.ca

I’m going with 10k-30k.

TM3x2 Chris

Hehe, I think you are very much within the range.

Nix

LOL! nice one!

ziv

LOL! My money is on your bet, Mark.

TM3x2 Chris

I see your 14k-17k and raise you 21k.

TomArt

What problem is that? (not snark, seriously asking)

Ron M

What problem are you talking about I haven’t heard anything.

Doggydogworld

Ron M – There are threads on Model 3 Owners Club. There are always random delivery problems, as you’d expect, cars get mis-routed or get scratched in transit and need re-touch. There was a flood of reschedules in mid-July because contracts weren’t ready in time.

In early August people suddenly had delivery times cancelled at the last minute and their assigned VINs disappeared. They got new VIN and new delivery date. This was a something different, and seems to be fixed now. They had some theories (paint problem, etc.) but it was still a bit of a mystery. I read through the thread but didn’t bookmark it.

Just an example of the kind of stuff they’re still running into. They’ll smooth things out soon enough.

Ron M

Tesla has been delivering more vehicles in the last month of each quarter since the beginning. Musk said at the conference call that he thought this situation has been corrected and that from now on we shouldn’t see the big increases of vehicles in the last month of each quarter.

Viking79

The last month of each quarter is due to more vehicles being delivered in the US in that month while the first two months of the quarter the production more of the cars might be going out of country (takes longer for them to ship so they ship them early in the quarter out of country so that they can be delivered before the end of quarter).

Model 3 deliveries will be flatter until they start shipping to other countries, then they will do the same thing as the Model S and X. Unless they go private you will continue seeing this.

Nix

Ron, the monthy shifts are not accidental, it was by design. It was done to maximize their pipeline, as part of their sales and delivery pipeline management. The problem was that specifically in Norway (and only in Norway) Tesla maxed out all the delivery trucks that were available and had to hire some shady contractors in order to meet delivery promises.

When this was exposed as a problem, they changed deliveries to Norway to spread out the deliveries. The problem instantly went away. But there will still be monthly delivery windows for all other nations.

Now they are fighting to resolve service delays. Both problems are due to huge sales numbers, which makes them the best kind of problems to have.

antrik

I think they said that they are changing the way they schedule domestic vs. international deliveries, to smooth this out more generally?… Not sure though.

Ron M

I also think your confusing a production problem with a delivery problem.

Pushmi-Pullyu

Yup. VINs are assigned when a car is entered into the production queue, so there would be no reason to assign new VINs because of delivery problems. Once a car rolls off the end of the production line, its VIN isn’t going to be changed. In fact, it would be rather hard to change it, since the VIN is stamped on several different parts in the car, some difficult to access.

YVES LAURIN

They did not saw that coming ?

TM3x2 Chris

Who?

Viking79

Elon said 50-55k this quarter. That means they average about 18k/mo. So 14,250 in July, maybe 18,000 in Aug and maybe 22,000 in Sep.

Ron M

I think he was overly optimistic so much up to now I think he may have under promised this time, at least from the production numbers in Bloomberg.

Nix

I think it includes the expectation of intentional shutdowns and slowdowns of the line. Like they already confirmed they did in early July around the 4th of July holiday

Nix

That’s good news on the potential run rate side. The problem is that expansion to 8K/units week is just one of the transitory goals on the way to roughly around 10K/week during full weeks of production (typically 45-50 weeks out of any year for most auto manufacturing assembly lines).

In order to get to their goal of a 10K/week rate, they WILL have to make line changes, Musk and Tesla have been very very clear about this. So even if they hit their target production RATES, just multiplying by weeks in a quarter or year likely won’t give very accurate estimate of sales numbers. What is unknown is how much downtime will be required for those line changes between now and sometime in Q418 or Q119.

BoltEV (was SparkEV)

Why not add new lines instead of making line changes? Given that they will be making many more cars like Y and more, adding more lines seems better for the future.

Michael

Expect that as they build more plants, existing lines will build different cars.

The Chinese plant will produce cars for that market and export to other countries cutting demand for Model 3 production at Fremont. This should coincide with introduction of the Model Y, which I expect will be built on GA3 along with the Model 3. Likewise, the Chinese plant will probably build S/X on one line and 3/Y on a separate line. Build a plant in Europe and rinse and repeat.

Will

👍👏👏👏👏

nix

Yes, the plan is definitely for their Chinese plant (hiring already underway for construction) is to deliver to Pacific Rim markets, a European plant for the EU and surrounding markets.

Model Y mass production for the US market is still a mystery.

antrik

Should we really expect the Chinese factory to export to other markets? That would require the Chinese variant to be built using exactly the same technology as the international one — which would probably make them ineligible for Chinese subsidies, thus putting them at a major disadvantage… I wouldn’t be surprised if the Chinese factory builds a modified variant (using Chinese batteries), that they won’t sell in other markets — just like most other global makers are doing with EVs for the Chinese market…

Brian

No, Tesla’s Master Plan Part Deux calls for gigafactories in China and Europe so cars don’t have to be shipped accross ponds and get tagged with additional tarrifs.

Robert Weekley

And use Local Material Supplies, as much as Possible!

Pushmi-Pullyu

I expect Tesla’s Chinese Gigafactory to supply all of the Asian market, not just China, unless politics and tariffs make it less expensive to ship to certain countries from the USA.

Nix

I see I made a mistake in my post. I called it “Pacific Rim markets”. That should have been the singular “Asia Pacific Market”, as in one market.

It is an industry term, similar to the “North American Market” (which is only US and Canada and no other nations in North America, even though that seems contradictory).

I do not expect that Tesla would import US built cars in large numbers into that market, or export outside of that market in large numbers. I fully expect them to be able to build for multiple regulations in different countries because car makers already do this all the time. Including CARB compliant vs 49-state vehicles within just the North American market.

antrik

I spot a fellow vi user 🙂

nox

EDIT: oops!! name typo! should be nix. Can’t fix

Line changes are standard for the industry. Most every company schedules downtime for line updates. Typically in the summer as they prepare for changing over to a new model year. Building a complete new line just to update a line is not industry standard practice.

Sustainable2020

Ok fine but Tesla has enough model 3 demand for the next several years to justify its own line let alone the mass production of the perhaps just as popular model Y to come next decade. I say Tesla goes big, with production capacity, to dominate the bev market in the states and most other areas of the world for many years to come.
Gotta charge much more for the model Y though….maybe $45K for base model

Pushmi-Pullyu

The Model 3 already has two production lines, and that doesn’t count the (probably temporary) line in the tent.

Telsa could certainly update one TM3 line while the other keeps running, altho it would probably be more efficient and cost less to update them both simultaneously.

Nix

I see your point, and don’t have an answer.

Model Y will have to be more expensive. Even if just because inflation is reducing the value of the US dollar, making anything with a $38K price in 2016 dollars to have a higher price in the 2020’s.

antrik

Technology costs are usually falling faster though than the inflation rate… Especially battery prices. I don’t expect the entry level Model Y to cost more than some $40,000.

liberty

The lines are far from optimal now. Building more lines without fixing the production problems is a waste. They expect to work out the problems in the next couple of months. If they can do that, then when time comes for the Y, they can expand capacity at a better profit margin (at other plants ;-).

antrik

The original plan was for Model Y to have very different manufacturing lines… Not sure whether that’s still in the books though, considering the struggles with Model 3 automation.

(⌐■_■) Trollnonymous

Prod number really won’t mean anything till the delivery bottleneck is corrected.

kubel

skeletonwaiting.jpg

$35,000 Model 3 now?

Brian

Q1 2019

Doggydogworld

Q1 2019 is SR battery, not $35k. Will almost certainly have premium package. AWD should be available, too.

Nix

Tesla has already done some unbundling (performance package) and even made a price cut. non-PUP availability will come with volume. Once it is released for the LR, releasing non-PUP option for the SR would just make it more cost effective for the LR too.

I would not bet on the LR going all the way to the end of the year still requiring the PUP.

tim

Unfortunately/fortunately the demand for the expensive is high enough to postpone the budget model. If the could sell 10k of the $50k Model 3’s ever week, why would they bother with the $35k version. Either way, it’s the same number of dinosaur burners not being bought.

Robert Weekley

Patience, Grasshopper!

BayAreaMech

I am genuinely curious as to why anyone thinks the market will support 520,000 Model 3 sales annually (on a global scale). There just isn’t enough demand for small sedans, much less EVs, to keep that going. Once the early adopters have their cars, I think Model 3 sales are going to slow substantially. This isn’t mean to be an attack on Tesla or the Model 3, just a frank assessment of the auto industry. If Tesla can actually sustain more than 300,000 annual sales of the Model 3 a few years down the road THAT would be legendary.

Viking79

Please research how many “Small sedans” BMW sells worldwide. There is easily a global demand of that many premium sedans.

Doggydogworld

BMW 3 series start at 34k in the US but lower end models are much cheaper in Europe and other places. Tesla Model 3 is in a different price class, even at the $35k original base price which Tesla no longer talks about.

Pushmi-Pullyu

“I am genuinely curious as to why anyone thinks the market will support 520,000 Model 3 sales annually (on a global scale). There just isn’t enough demand for small sedans, much less EVs, to keep that going.”

Reality check:

2016 Best Selling Cars w/ MSRPs — Car & Driver

Cruze $17,850 171,552
Sonata $22,935 185,614
Elantra $17,985 188,763
Sentra $17,875 197,672
Malibu $22,555 205,117
Fusion $23,485 245,708
Altima $23,385 282,617
Accord $23,330 311,352
CRV $24,985 319,557
Civic $19,615 335,445
Corolla $19,395 346,999
Camry $24,885 355,204

— credit to William Edwards

William

The Honda CRV is not what many would consider a “small sedan”, here in North America.

It’s a small or “compact crossover”, on a Honda Civic platform (sedan).

Probably more of a Tesla Model Y contender, when it becomes available.

Dan F.

These look to me like US numbers, and those vehicles aren’t in competition with the M3. As many have noted, it’s BMW, Audi, Mercedes, Lexus small sedans you should look at when comparing to the Model 3.

antrik

Top Model 3 trade-ins suggest that in spite of the price difference, Model 3 *is* actually taking market share from these cars. And this is only likely to become more pronounced when the base variant becomes available.

Robert Weekley

And, as noted, by trade ins: BMW 3’s, Honda Accords & Civics, Audi A4, & Prius!

So, how many of those? (Only 2 of these Top 5 Model 3 Trade in vehicles, were in that list above, which is 2 Honda’s! No mention above of Prius Sales, or BMW 3 series, Audi A4’s!)

Nix

First off, a 10k/week build RATE implies 450K to 500K a year (not 520K) because car makers traditionally don’t build cars 52 weeks a year. There traditionally are down weeks in the year.

Second, the Model 3 is NOT a “small sedan”, it is a midsize sedan. But it will indeed take sales out of both small and midsize sedan sales categories, and from the luxury car categories. It will even pull from crossover sales because for some dumb reason we have no AWD crossover EV’s in the land of AWD SUV’s/crossovers.

300K is indeed a massive number for EV sales, and super cool no matter what!! But at current rates where Tesla sells around half their cars in the US and half outside, that is only 150K cars in the US. And there are 17 Million vehicles sold in the US each year. 150K is less than 1% of total automotive sales. The difference between 150K US sales and 225-250K US sales is around half a percent. I’m not sure one is possible and the other is impossible.

Dan F.

I don’t know about worldwide demand (China’s the big fish now) but I am curious to see what happens to US demand as the tax credits phase out and the backlog is worked through. In the second half of 2019 ($1875 credit) and 2020 it will be interesting to see what happens to demand and also what happens with the base model 3.

Jeff

Has Tesla sustained their production of 5000 cars a week since the end of June?

Pushmi-Pullyu

Reportedly they hit that for two weeks in July, so it looks like they are up to that on a steady basis by now, barring occasional shut-downs for upgrading the line.

Nix

Tesla had a well published shutdown for the 4th of July where they updated the line, and then took a conservative approach in validating the line after they re-opened it. Then they only reached 5K in the last week of July. So we know they haven’t had sustained 5K in every week since the end of June.

Kdawg

Can we get a service shop opening of 1 per week? Or maybe 2 rangers per week? With that many new cars going out, they are going to need it pronto.

Pushmi-Pullyu

I’m pretty sure they are gonna need to add more than two Rangers per week!

Seven Electrics

Positive analysts are always correct, but negative analysts are charlatan hacks, eh?

TomArt

When based on demonstrably false or inaccurate information? Yes.

Get Real

Talk about a charade!
Charlatan hacks are trolls like you who blatantly lie when you falsely claim to own multiple Tesla’s while at the same constantly bashing both their cars and the company.
Go crawl back into your shorter hole and quit coming here only to lie and FUD.

Pedro

Ain’t you a big ball of hate. ☹️