Tesla Q4/2016 Earnings: Model 3 Confirmed On Track For July, Volume Production by September

9 months ago by Jay Cole 153

Interest in Tesla’s Q4 numbers only surpassed by thirst for upcoming Model 3 news!

After the market closed on Wednesday Tesla released its Q4 2016 earnings, and gave an operational update on all things Tesla. But most importantly, on the Tesla Model 3!

Tesla debuted the Model 3 almost a year ago, saying production could start as early as this July…but since then, not-so-much with the updates

Heading into the report, the street expected the company to lose 53 cents per share on revenue of $2.12 billion.  Given that the company already pre-estimated Model S and Model X sales a month and a half ago, there wasn’t any major surprises.

With that said, the company beat street estimates on the revenue side – logging $2.28 billion, while the earnings per share came in light, with Tesla reporting a loss of 78 cents.

Interestingly, heading into the report almost no one cared about this month’s quarterly financials, instead all eyes were on the upcoming Tesla Model 3, and would the company finally offer some news by way of progress?  And they certainly did, stating:

“Model 3 on track for initial production in July, volume production by September”

Fremont to be a very busy place starting in Q4 of this year!

Not only did Tesla provide confirmation on the Model 3 timelines, but put specific targets on what they were looking to hit:

“Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018.”

With this disclosure in mind, and how Tesla has operated in the past, we can approximate that Tesla (provided they stay on track) will likely build about 25,000-35,000 Model 3s in 2017; which is perhaps not the optimistic 100,000 that was thrown about by CEO Elon Musk as a potential volume number, but still pretty decent nonetheless.

Conference call update:  As we expected, the production estimates for the quarters are to start slow and then build up (as opposed to being more linear), with CEO Elon Musk saying that Tesla wants to be the best manufacturer on the planet, and forsees a “S curve” to Model 3 production ramp, with the starting volume to be low as the company irons out initial issues.

Tesla noted that all their supply chains and manufacturing are well on their way to “support volume deliveries” in the second half of this year, and the company also confirmed earlier reports the first Model 3 prototypes were built earlier this month.

“Initial crash test results have been positive, and all Model 3-related sourcing is on plan to support the start of production in July. Installation of Model 3 manufacturing equipment is underway in Fremont.” 

Unfortunately, the company didn’t put a date on showing off those production-intent models to the public, or any pricing information.

Conference call update: CEO Elon Musk again notes the first Model 3s go to Tesla employees and investors, but the CEO says he expects customers to be able to start configuring their cars in “3 to 4 months”.

Conference call update 2: CFO Wheeler is asked about the Tesla Model 3 order/reservation status. No definitely answer is given, other than Tesla is in “great shape”.

We should be seeing the first Model 3s on US roads this summer!

Conference call update:  Tesla CEO Elon Musk again reiterates that the Model 3 is a more basic car to build than that of the Model S & X, cites the fact the Model 3 will only have “one screen instead of two”, less internal wiring…and humorously, no falcon-wing doors.

Cost of operations heading into production?

“We expect to invest between $2 billion and $2.5 billion in capital expenditures ahead of the start of Model 3 production.”

With only about $3.4 billion on hand, and not likely to turn a profit anytime soon, one can expect another round of capital raising is likely imminent.

Conference call update: Further to the expectation that Tesla will need more cash, on the call Musk says no capital is needed for Model 3 ramp, however the CEO notes that will leave Tesla close to a point where it would soon need to, and therefore it “probably makes sense to raise capital to reduce risk”.

So yeah, 1+1=2, and one should likely expect more fundraising to occur pretty soon.

Tesla expects to sell upwards of 50,000 copies of the Model S and Model X in the first half of 2017

Tesla Model S and Model X

Tesla tightened up its early Q4 estimate for sales on the Model S and Model X, noting it sold 22,253; meaning that full year sales of its two models ended up at 76,230 – missing earlier guidance of 80,000 units to be moved.

Higher average transaction prices in meant higher margins (22.6% vs 19.7% in 2015)

Interestingly, and for the first time ever, Tesla did not give full year sales guidance for 2017, perhaps unwilling (or not comfortable) with putting a number on the Model 3, instead we got half-year guidance ahead of the 3.

“We expect to deliver 47,000 to 50,000 Model S and Model X vehicles combined in the first half of 2017, representing vehicle delivery growth of 61% to 71% compared with the same period last year.”

Tesla did later comment on the lack of full year guidance:

“…since even a couple week shift in timing could have a meaningful impact on total deliveries and installs, we are focusing our guidance on the first half of the year.”

Consensus with analysts ahead of the report was for about 110,000-115,000 – which actually still seems fairly likely, as one assume their will be some pause/hiccup in Model S/X production as the new Model 3 comes online.

On the demand side, Tesla noted:

“In Q4, we received 49% more global net orders for Model S and X combined, compared to the same period in 2015, as both vehicles continue to win over new customers.”

On the financial side of things, automotive gross margin was 22.6%, up from 19.7% a year ago.  With more Model X sales in the mix, the average transaction price per vehicle was up about $1,000 in Q4.

Tesla promises to add to its infrastructure footprint ahead of the Model 3

Infrastructure and Service

A hot topic of late has been Tesla’s ability to service its offerings, as the pace of new service centers, and even Supercharging stations has been lagging the sales, something Tesla notes it has been improving in this area of late, but promises to add more infrastructure still.

“To support accelerating vehicle deliveries and maintain our industry-leading customer satisfaction, we are expanding our retail, Supercharger, and service functions.”

Here is a quick look at the sales and infrastructure metrics from the last year:

Tesla 2016 Metrics

Tesla noted that it expects to “reduce the global average wait time for vehicle service to less than one day
by the end of the first quarter of 2017.”

“Ahead of the Model 3 launch, we are reengineering and expanding our operations as we anticipate the needs of a much larger family of Tesla owners. In service, since more than 80% of our repairs are so minor that they can be done remotely, we are expanding our mobile repair service that allows Tesla to make vehicle repairs at an owner’s home or office.”

Find there just aren’t enough Supercharging locations and/or stalls? If you live in North America, Tesla has some great news for you!

Supercharging

Pretty much underlining the fact that all the Tesla Model 3 deliveries will be kicking off in North America, Tesla said they will be putting its emphasis on expanding the Supercharger footprint in the US and Canada during 2017.

“We plan to accelerate expansion of the Supercharger network this year, starting with doubling our number of North American Supercharger locations in 2017.”

Tesla Solar Roof production confirmed for 2017…but that was about it

Tesla Energy

With the recent acquisition of Solar Energy, and the recent start of new battery production (2170 format) at the company’s Nevada Gigafactory, a lot of attention is also on Tesla’s solar and energy storage products.

Q4 deployment was as follows:

  • 201 MW of solar energy generation deployed in Q4
  • 98 MWh of energy storage deployed in Q4

Tesla also briefly touched on its new “solar roof” product, but really didn’t get into specifics, other than to confirm the partnership with Panasonic to build then, and that it would happen at its Buffalo, NY facility at some point this year.

Tesla Gigafactory Progress From January

Gigafactory

As it relates to Tesla’s Gigafactory in Nevada the company didn’t offer specific numbers on the build-out progress, but did offer some news on future factories, and also confirmed that the installation of Model 3 manufacturing equipment is happening now.

“Later this year, we expect to finalize locations for Gigafactories 3, 4 and possibly 5 (Gigafactory 2 is the Tesla solar plant in New York).”


How did shares react to Q4 earnings and Model 3 news?  Tesla traded up around $9 (3%) after the news was released, but mid-day trade the next day saw a drop of about$17  (6%), as investors digested the short-term impacts of the latest quarter’s release to the bottom line.  A real-time quote can be found here.

Additional conference call notes: 

  • Tesla CFO Jason Wheeler will be leaving the company, which apparently means that former CFO, Deepak Ahuja is coming back.
  • Musk plan of succession/time allotment at Tesla as it relates to his SpaceX plans to head for  Mars is asked.  Musk states there is no changes planned for his duties at Tesla, but adds he thinks it would be great if the new administration announced a Mars program
  • On unionization: Musk says Tesla workers are compensated better than counterparts at other OEM, (including equity), adssthat Tesla has a lower injury rate as well
  • Elon Musk is asked about Trump’s EPA (lead now by controversial pick Scott Pruitt) and his attitude towards the loss of incentives on EVs.  Musk seems ok with it, but says that the loss of incentives should be uniform and across the board (ie-including fossil fuels).  From a competitive angle, Musk notes that Tesla would be net-gainer in the EV space, as most rivals get larger credits – as expressed as a percentage
  • perhaps unsurprisingly, Musk is not fan of California putting an income cap (and sliding scale) on receiving plug-in vehicle credits from the state

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153 responses to "Tesla Q4/2016 Earnings: Model 3 Confirmed On Track For July, Volume Production by September"

  1. WadeTyhon says:

    I know this story is in the works and will be updated over the next few hours…

    but if the headline “Model 3 Confirmed On Track For July, Volume Production by September” is accurate then that is fantastic. 😀

    I have had a feeling Tesla would get it out by the end of the year.

    1. GeorgeS says:

      Agreed Wade,
      I’ve been saying a lack of visible alpha test vehicles meant the beginning of customer deliverable production cars would be at the end of 2017 at best.

      Based on tesla’s quote. Production begins in july.

      The question is:

      Are these july vehicles going to be delivered to customers or are they production beta cars meant to test the production line and not be delivered to customers.

      1. WadeTyhon says:

        Remains to be seen of course. I imagine the number of Model 3s produced over the summer will be a trickle at best… probably going to employees, long time Tesla owners, and as they get closer to September – some of the first model 3 reservation holders looking for fully decked out vehicles.

        Even if theyre delayed a month or two they can probably still get enough out by November/December to make a huge splash (for an EV, relatively speaking)

        1. unlucky says:

          It still seems very unlikely to me they will build any production vehicles by summer. Putting a car into mass production when you don’t even have test models on the roads right now is risky. It’s not only difficult but also probably a bad idea.

          And given Tesla doesn’t even have any private area to test drive them that means there surely haven’t even been all but the barest of mules outside the walls of their buildings.

          It would be wise to get more on road testing than beginning sales in summer would afford them.

          Test cars in summer, sure. Probably even before then.

          1. Nix says:

            unlucky — The story keeps evolving, so I’m guessing you posted this before the whole story came out. So I understand if that is the case.

            “It still seems very unlikely to me they will build any production vehicles by summer.” —- The latest news is volume by September, with some before. So “any” isn’t the right word. But it sounds like you are mostly correct, and mass production will be Fall, not Summer.

            “And given Tesla doesn’t even have any private area to test drive” — Tesla has their own private test track on their own private property. They are also known to rent time at secure test facilities, like AET’s 820 acre secure private test grounds. Both free from prying cameras.

            “Test cars in summer, sure. Probably even before then.” — The latest news is that they’ve already built test cars, and even crashed some test cars.

            They are further along than you believe.

            1. Pushmi-Pullyu says:

              Yes, it looks very much like you were correct as usual, Nix.

              Given the lack of any “spy photos” of any Model 3’s out doing road tests on the roads and streets surrounding the Fremont plant, and with the recent rumor/report that Tesla was planning to produce some production prototypes starting last Monday, Feb. 20, I had disputed your suggestion/assertion that Tesla was doing testing on closed tracks, away from any paparazzi. It looked to me like the reason we haven’t seen any “spy” photos is that there weren’t any production prototypes to spy.

              But according to this report, Tesla has already done crash testing on the Model 3. Therefore, they must have already produced at least a few production prototypes prior to Feb. 20.

            2. unlucky says:

              Their test track on their property is not private. It’s very easy to view. It’s not like GM’s Proving Grounds for example. If there were myriad Model 3s out driving it you would have seen pictures.

              And it’s not good for much at all, it’s a very simple pinched loop.

              Maybe you’re right about the AET track, I don’t know. But for the amount of testing they should have at this point they’d have to rent it out a lot.

              You mistook my comment about making test cars this summer. I know they have test cars already. We’ve seen pictures. But my statement stands. I don’t see them making production cars this summer, merely test cars. If you would like to term them “additional” test cars to distinguish from the existing test cars then be my guest. I simply didn’t bother.

              1. Nix says:

                “Their test track on their property is not private. It’s very easy to view. It’s not like GM’s Proving Grounds for example. If there were myriad Model 3s out driving it you would have seen pictures.”

                Source please?

                Here’s my source:

                http://insideevs.com/picture-s-day-teslas-test-track-fremont-action/

                “This test track is part of the reason why it’s rare to spot a prototype Tesla on public roads. This facility allows the automaker to conduct most of it “real world” testing hidden from the public’s eye.”

                1. unlucky says:

                  Source: I’ve seen it myself.

                  You can just take a look at Google Maps.

                  https://www.google.com/maps/@37.4851808,-121.9343982,196a,20y,41.67t/data=!3m1!1e3

                  The track was designed for doing a quick road test of production cars that came off the line. It isn’t for keeping prototypes secret. That’s a public road overlooking it.

                  You think maybe you’re not sure? Here’s the view the google maps car gets of the track from that road:

                  https://www.google.com/maps/@37.4863762,-121.9341589,3a,60y,90t/data=!3m6!1e1!3m4!1spRAJmcmGmtH96p2-5WKcBQ!2e0!7i13312!8i6656

                  1. How long can a vehicle be parked there on the shoulder of the road, sitting, waiting, wondering, when the Test Team will bring out a test car, before they see you sitting there?

                    Basically, I would bet it is like airline traffic without the contrails, it might be there, but you would have to be there at the right time and place to get that spy shot, unlike city streets, where everyone has a cell phone camera at least!

                    1. unlucky says:

                      I’m not sure why you think that matters.

                      The track isn’t private either way. If they had been running model 3s on it frequently there would have been many reports of people seeing them by chance by now. Even with no one parked there.

                      The track simply isn’t private and that’s why Tesla couldn’t use it for this purpose. Even if they changed the fences to block the view from there there are plenty of other places where you could view the track.You could get a room in the Comfort Inn just south of there and sit there with your zoom lens at the window all day.

                      They would need something significantly more private than that to be able to carry out testing with mules which resemble the final car in shape or wheelbase.

                      And to your last sentence, this is a city street. The Bay Area is not sparsely populated. That intersection just south of the track (880 and Mission Boulevard) passes probably over 100,000 cars a day.

                      You know what? I have to go look at how that intersection looks now. That area has been torn up because there is a new set of BART (transit) train tracks through there as well as a BART station almost directly behind the Tesla plant (behind being east). You can see the construction beginning in that google maps photo.

                  2. Nix says:

                    unlucky, it does certainly look like the source I quoted got the privacy aspect wrong. So it does look like IF people were spying from that corner, or IF people were spying from the hotel you mentioned, that they certainly could have seen track use. They COULD have taken pictures.

                    And yet we know Tesla ran the first 2 Model 3 prototypes SOMEWHERE before they first appeared on the stage at the reveal last year. There is absolutely ZERO chance that customer test rides at the reveal event were the first time they were ever driven.

                    And yet there were no mass leaks of photos before the event.

                    So how do you explain your broad claims that if there are no pictures, they don’t exist, when there were also no pictures of the prototype TM3’s being driven before the reveal?

                    Your continued meme of if we don’t have pictures, it never happened just doesn’t hold water. Otherwise you would have to explain how the prototypes appeared out of thin air at the reveal, since by your standard they didn’t exist until photographed at the reveal.

                    1. unlucky says:

                      When the evidence doesn’t back you, just maintain your stance and pick at the other person.

                      Sheesh.

                    2. Nix says:

                      I said my source was wrong, and conceded that people certainly could have photographed. What more do you want?

                      All you have to do to prove your repeated thesis that Tesla test cars don’t exist unless we have pictures, is show where you knew about the existence of the Model 3 prototypes before they appeared on stage.

                      Or simply admit that your repeated meme of ‘pics or it didn’t happen’ is fatally flawed.

            3. James M says:

              I think best everyone use a well spent hour to go through the the Q4’2016 investor’s letter and webcast Q&A for themselves: http://ir.tesla.com/events.cfm.

              Key M3 highlights not already mentioned:
              – Tesla/SpaceX staff order configuration in 3-4 months
              – public order configuration close to production start
              – July production start: 1,000 / week
              – exponential S curve growth past 5,000 / week in Q4

              This M3 production guidance CONSERVATIVELY looks something like July=3,000, Aug=5,000, Sep=9,000, Oct=15,000, Nov=20,000, Dec=25,000, 2017>75,000.

              1. Jay Cole says:

                Hey James M,

                After listening to the call, there is absolutely no way they are building those numbers. I mean I would love it to be true, but via Musk’s talking points on the order/parts pipeline, and a very “best case” scenario I think of ~4-6 weeks from that last part arrival to production complete.

                Musk laid out the max numbers specifically, and put a lot of hedge for supply chain failure in there at the same time.

                This is Musk from the call:

                “Well, I feel pretty confident that we should get there by the end of this year, to 5,000 a week.

                I do want to separate this from parts orders. I know a number of our suppliers are listening. It’s impossible to keep, like nothing is a secret these days, it seems. Yes. It’s like major intelligence organizations cannot keep a secret. It’s like, really – I don’t know who can, honestly. So, when we place parts orders with our suppliers, we’ve told them 1,000 a week in July, 2,000 a week in August, and 4,000 a week in September. These are parts orders. Then the parts need to arrive. They need to be turned into a car. And the car needs to be delivered to customers

                None of these things occur instantaneously. And we have what I call, like, maybe the term paper problem of, like, I was a teaching assistant in college. And no matter what date we set the exam paper for, when the term paper was due, there’s always like some number of people that are late. It’s just the way it goes. People sometimes – well, and I’m guilty of this too. Like too optimistic about the timing or they get unlucky or something like that.

                So, we have to set these really strict dates, then some number of people are late, but it only has to be 1%, and then we either have to make those parts manually at great cost or slow down the production rate. And when I say great cost, when you make something manually as opposed to through mass production, it can be 10 times, 20 times, 30 times more than a part that’s handmade as opposed to made with high volume production equipment.

                So, that’s essentially – I’m trying to give you, like, what’s the problem space look like in my head so that you can at least try to model it. You know what I know. And if I knew which 1% of suppliers it was, right now, I would honestly take action. But I don’t because I don’t know who’s going to be unlucky. I don’t know who’s being really optimistic. But the 1,000, 2,000, 4,000, those are the deadlines we’ve set out for our suppliers for parts delivery and then parts get made into cars, cars need to get delivered. Those are three separate steps.”

                Again, we would be delighted to be wrong on our estimate, but Musk put out his best case numbers out in plain sight, and I don’t think you can get close to 75k even using those.

                If you allow for flawless execution/supplier perfect/production perfection, 4 weeks lead time to build and a Holiday week in December, you could theoretically get to ~60k, if you are allowing for 6 weeks, its about ~50k…and there is a lot of big ifs/assumptions in there I think.

                As always, time will tell, (=

                1. realistic says:

                  Thank you, Mr. Cole, for being an honest guy about this when your heart is (quite understandably) rooting for a much more optimistic perspective.

      2. JeremyK says:

        I have to imagine that those July builds will be what we call “non saleable” in the auto industry.

        1. James M says:

          They will be sold, to staff. Based on estimates (ie 10,000 orders), staff sales will mostly be filled in the summer.

          1. realistic says:

            How does that work, James?

            Does Tesla have so much influence over its employees that it could convince them to spend $30,000+ for a car that’s been prematurely introduced to the markets?

            How exactly does the comapny address its warranty reserve to put 10,000-ish cars on the road that will likely require extensive rework?

            Yes, Tesla is self-insured, but they nonetheless purchase coverage from re-insurers, and there is no indemnification agreement imaginable that employees could be forced to sign that would absolve the company from risk for such an irresponsible act. So what will that cost?

            This suggestion that there will be hundreds or thousands of employee-PURCHASED beta cars to inaugurate the Model 3 production run is pure fantasy. (I know you did not originate the idea, so my apologies if it seems like I’m picking on you, but by all means don’t make the mistake of buying into it.)

            1. BenG says:

              Tesla is making Beta cars right now for testing. When production starts in July or August, those will be cars built for sale, at least after the first 100 to come off the line, or so. Sure the earliest cars coming off the line can be expected to have more issues, but they will not be Beta test models.

              1. realistic says:

                Sorry: they can’t be “beta test models”, based on the3 way Tesla has described their “betas” in the past (i.e., Model X). Without dies completed they are not being built off-tool. Musk himself describes dies not yet designed and processes not yet developed (read the transcript). So they are not even being built off-process. They are “alphas” if anything, just one step away from pure mules.

                1. BenG says:

                  True the current cars are not being built using the production equipment. But they are built using parts designed as production intent, IINM.

                  I’d call that beta testing the car, but I’m not going to quibble over semantics.

                  They are not yet testing the production equipment and obviously not production cars.

            2. Nix says:

              Realistic — Tesla began unit testing parts of their Production Assembly Line way back in October.

              Calm down Chicken Little, the sky isn’t falling.

              1. realistic says:

                That’s about on track with where any manufacturer would be 18 months before deliveries to the showrooms. I know that Tesla is going to revolutionize body part stamping and other things (though if you listened to Musk yesterday you’d be hard pressed to believe that).

                And, no, the sky is hardly falling. The project is (in reality) going about as fast as it can go and not produce a wildly flawed piece of junk. The company will continue to sell a story about world-changing system-of-systems project management concepts, like setting unrealistic dates and trying to keep reality a secret, while reality slowly creeps along. Amateur auto “experts” will marvel at Musk pronouncements about how hard it is to manage auto production. Tesla will be able to raise money still, even for dumb stuff like buying SCTY. They will find sources to keep the Model 3 rolling and they will deliver low-rate production cars that don’t suck in 2018. This is perfectly reasonable and there’s hardly a Model 3 adherent that won’t stick around for the ride. That spells success to most people.

                What isn’t going to happen is some sort of revolution in mule-to-homologated-car production, though it will be a great show in the interim.

            3. georgeS says:

              Realistic,
              “How does that work, James?”

              Just guessing that the employees didn’t purchase the cars. They are just testing them.

      3. george clack says:

        Believe the real question is if you can’t make money selling $100,000 cars how will you make it selling $35,000~40,000 cars?

    2. SparkEV says:

      I wish they can get volume out by end of this year, but based on their past history, I doubt that will happen. “Something” will come up. If they end up shipping even 100 Tesla 3 by end of 2017, I’ll buy Elon Musk a beer.

      1. As a ratio per your numbers, you may well need to buy a whole Beer Store, with at least one Beer to each employee!

        1. SparkEV says:

          Only 1 beer if Tesla 3 sells at least 100, and customers put miles on them. I don’t count selling to Tesla employees.

          2 beers if Tesla fills all reservations and sells at least 100 of the $35K models.

          3 beers if I actually get to buy Tesla 3.

          1. floydboy says:

            Three beers?! You must drive an EV!

      2. Ziv says:

        SparkEV, I thought Tesla would be delivering 100-200 III’s in December of this year, and that when the base model arrived, it would cost $37,900.

        I think they may end up delivering a couple hundred in October now, and deliveries in September are not out of the question. And when the base model does arrive, it just might be priced at $35,000.

        I am surprised but Tesla may actually deliver the goods this year.

        I hope the car is phenomenal and that they sell a boat-load of them!

        1. SparkEV says:

          Tesla will sell hundred million Tesla 3, so there’s no question it will sell well. Question is of timing. I’m just looking at their history of delays. Yes, past is no indication, blah blah, but we will see.

          1. James M says:

            SparkEV listen to the Q&A webcast (http://edge.media-server.com/m/p/5tbao926). Musk & gang do a far more convincing job of explaining why M3 is on track than your arbitrary speculations do not.

            1. SparkEV says:

              You mean just like Tesla S and Tesla X? Apparently, you’ve never heard the story about a boy who cried wolf. To quote a Texan village idiot, “fool me once, shame on, shame on you. Fool me—you can’t get fooled again.”

  2. unlucky says:

    5,000 per week in 4Q would be amazing.

    1. AlphaEdge says:

      24/7, 3 shifts at 30 vehicles an hour would do it?

      Walked by the Tesla store the other day, and told a friend, let’s go in, and he was amazed that the car has the option to drive itself down the highway. He never knew! He’s now interested in the M3, as he hates his commute on the highway each day.

      Once Tesla burns through it’s reservations, they should run TV ads.

      1. jelloslug says:

        To put it in perspective, the Rouge River Ford truck plant makes 500 F-150s a shift, three shifts a day, 7 days a week. There are two other F-150 plants that make up the balance.

        1. Stimpacker says:

          Yup, and that’s what makes a Tesla pickup a doubtful proposition.

          Americans just love pickups. Even the Cash-for-clunkers benefited them. Most pickup owners don’t care about gas. Large chrome exhaust pipes and raised shocks are more important.

          1. BenG says:

            There are so many pickup truck and SUV owners that inevitably many have different needs and wants.

            The Tesla Pickup will probably be built as a very high-end truck that blows every other truck off the road with it’s performance. It will offer cutting edge technology and automation in the cabin. That package will appeal to some significant minority of high-end truck buyers.

        2. Durkle says:

          Actually, it’s about 600/shift 2 shifts per day (10 hour shifts), 6 days/week. Three shifts total with 4 shifts each. Also, there’s another F-150 plant in Kansas City, MO, pumping out another 600 per shift, 12 shifts a week… MANY trucks, but again, this is the largest volume seller in the US.

          Also, why the BEV market will always be small compared to total US sales until there is a whole line of small-full size cars, SUVs, trucks, and vans available. Here’s to hoping that’s just a couple years away!

        3. Nix says:

          I think it is a mistake to use any other car maker as the measuring stick for what Tesla will be doing in the future.

          It is well documented that Tesla is targeting assembly line speeds never seen before in the automotive industry. And they have bought the robotics company to build the factory.

          search phrases like “alien dreadnought”, “machine to build the machine”, “20-fold increase”, and “one meter per second”. Too many links to post here.

          This repeated meme of trying to limit Tesla to just what the Big 3 car makers can do simply doesn’t make sense.

          If all the other car makers were the ones to beat, THEY would be making the Model S back in 2012, not Tesla.

      2. Owners will still be the best and most personal ads!

      3. unlucky says:

        It doesn’t currently have the option to drive itself down the highway. Tesla hasn’t made a car that does that since October, 2016.

        As to the numbers, it isn’t difficult to run the line that fast. The difficulty is in ramping up that quickly. To get all your suppliers making good quality parts that quickly and to then ramp up your own assembly/production also. It’s a difficult task and Tesla hasn’t been adept at it in the past. With the Model X they made about a hundred and then stopped and made seemingly none at all for over a month.

        It’s a fast ramp for a complex product. 5,000 a week in 2017 would be quite amazing. I’m not saying they can’t do it just that it will be amazing if they do.

        1. ThombdBhomb says:

          Making a simpler version of things you’ve already made should be easier than making a more complicated thing. Model 3’s should be easier to make than Model X’s

        2. Nix says:

          “It doesn’t currently have the option to drive itself down the highway. Tesla hasn’t made a car that does that since October, 2016.”

          Those cars certainly have the ability to drive themselves down the highway. Tesla simply hasn’t enabled that capability to owners at this time. But they certainly will. The cars absolutely ARE made to do that.

          It is silly how you guys complain about Tesla releasing features too early, and then turn around and whine that Tesla isn’t releasing features fast enough.

          1. unlucky says:

            Those cars likely will have the ability to drive themselves down the highway. Right now they don’t and haven’t for 5 months. So, no, they don’t have the option to drive themselves down the highway.

            I’m not sure about your complaint here. I am in essence whining about the same thing in both cases. Tesla switched suppliers away from MobilEye and removed their #2 most lauded feature. Shortly thereafter they said it would be back in 3 months (end of 2016) and still isn’t back as of almost 5 months (today). We also discovered that they when they started putting in their own hardware they didn’t even do testing on the cars to see if the hardware was properly installed/working so some cars have misaligned cameras. This is making their image recognition harder and also some cars will have to be repaired before autopilot and some of the autopilot safety features will work.

            This isn’t a case of releasing something too late. This is releasing something too early. It’s not what other companies and car companies do. Other companies would make pilot production with new hardware, bring the software up on those, then put in testing on the line to let them test that future cars are being built the same as the hand production and pilot production (i.e. with aligned cameras) and then build some more cars. Then you test the software on those cars too. You repeat this process a few times and only after you’ve done all that would you announce the new hardware and offer it to customers.

            Tesla skipped all that and released too early, causing a lot of problems for them and their customers.

            So I’m not taking two different whiny positions, I’m taking a consistent single one. Tesla wants to be a mass market product (car) company. They still have a ways to go in order to actually be one.

            1. Nix says:

              They will reach parity with the old system next month, and will greatly surpass the old system soon after that point.

              Is all your whining seriously over a few months of limited use for 1 feature of a car that you don’t even own? Get a life.

      4. Nix says:

        “Once Tesla burns through it’s reservations”

        I don’t know when that will actually happen. As they start fulfilling their current reservations, and people show off their new cars, Tesla will likely just continue to get more reservations.

        It’s like bailing out a boat with a hole in the side of the boat. You keep bailing, and the water keeps filling it right back up again.

        1. For “Once Tesla burns through it’s reservations” I seem to remember comments like tis for the 20,000 Model S Reservations!

          Funny thing is, even as that car gets more expensive, the orders are stll increasing: “In Q4, we received 49% more global net orders for Model S and X combined, compared to the same period in 2015, as both vehicles continue to win over new customers.”

    2. Mikael says:

      I’d be very happy if they could hit 1000 per week before years end.

  3. Pinewold says:

    Totally awesome! As a reservation holder in the 20k-30k range, this is great news! Not expecting a Christmas present, but hoping for Q1 2018!

  4. Tom says:

    Jay’s math is a bit off. 5000/week for Oct/Nov/Dec is at least 60,000. Add in September from the ‘by September’ and you’re at 80,000. Use July/Aug as rounding error. Nonetheless far more than “we can approximate that Tesla (provided they stay on track) will likely build about 25,000-35,000 Model 3s in 2017” Not sure how you get to 25,000 from 5000/week. Or is it supposed to be per month?

    1. WadeTyhon says:

      Well, since production is expected to start in September and the letter states:

      “steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter”

      I’m guessing the first month or two will not be 5,000 a week or the “at some point” wouldn’t be so vague.

      But I agree with you, if they make this timeline then 25,000-35,000 seems very low ball. But 60,000-80,000 is probably a bit optimistic.

      But none of us know yet. 🙂 Who knows what could happen. It’s entirely possible that everything could go 100% smoothly and the Model 3 ends up being the top seller for 2017 with only 4 months on sale!

      1. Jay Cole says:

        Tom,

        Just to answer your question, we are only going by historical precedence. As mentioned above in the story, the quote is:

        “steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter “

        In the past when Tesla has put out a weekly production target, it has either not quite made it, or come right at the very end of the quarter (and/or only for a very limited moment), and given this is Q4, Tesla is going to a lose a week or two with the holidays.

        So there is ~10 weeks of available production in Q4, and as you mention July/Aug are likely rounding errors – plug in start of volume production in Sept at ~5k units built, and that leaves 20-30k for Q4, or an average of up to 3,000 per week.

        Additionally, while Tesla has often hit (or come darn close) to its start of production dates, the follow-through/unexpected hiccup factor has hit both the Model S, and more recently the Model X pretty hard.

        Again, this is one of those, ‘happy to undershoot moments’. Personally, I’m tickled pink with the notion of 25,000 Model 3s built this year, (=

        1. ray says:

          I agree, how easily we forget that when they released the Model X only 10 were released. Then there was a wait of a month or two (can’t remember) for them to get to the actual reservation holders.

        2. James M says:

          Elon keeps consistently repeating production start will be July. And now he’s saying 1,000 / week in July. I wouldn’t write off his statements as a rounding error. He is extremely deliberate in what he says. So I think we can be more optimistic that your estimates.

          1. Jay Cole says:

            Hey James,

            I think I touched on this below, with Musk’s excerpts from the conference call on the topic (see below).

            He 100% didn’t say 1,000/week production in July…only that limited production will start. In fact, what Musk said was tgat Tesla has told its suppliers to expect a order run rate for parts orders of 1,000 per week in July (2,000 in August, 4,000 in Sept).

            Musk then said from the order date Tesla had to wait for shipping of said parts, then actually built into a car, then to customer’s hands…and even at that, the projection is littered with hedges/disclaimers about things that can go wrong, and the 1% supplier issues for those who don’t ship/fail to comply.

            Would love to be wrong (delighted even) about our “up to 35k” production estimate in 2017, but there is nothing in the report or conference call talk from Musk that leads us to that assumption…because it was information from those things that caused us to peg it at that level.

    2. Doggydogworld says:

      They will ramp more or less continuously from 0 to 10k/week. If they were at 5k in Oct (or Sep) they’d be at 8k or so by December and that’s the number they’d have given.

      5k/week “at some point in Q4” means that’s their goal by the last week of the year.

  5. Kdawg says:

    Sooo… when will the production version reveal be?
    (I think we all want to see what the final interior looks like)

    1. Taser54 says:

      I’m waiting for the sacrificial supplier to be be revealed to explain the production delay.

    2. (⌐■_■) Trollnonymous says:

      There’s still supposed to be another “Reveal” of some sort. Maybe then they’ll showcase one?

      Not sure when this third one is supposed to happen though.

    3. Pinewold says:

      My bet is last Reveal is when they open up the web site to configure orders in 3 – 4 months

      1. Kdawg says:

        I was hoping for April. For some reason I recall hearing that month, something was going to be shown.

        Speaking of opening up design options, that’s #2 on my list. What options will there be (and how much)?

        1. Last I read on todays news sounded like the reveal part 3 will be about the time they turn on the Configurator pages for the Model 3, and it was sugested that would be July!

          That seems a bit late, unless July’s production is only final production line conforming vehicles?

          1. BenG says:

            If all their suppliers actually deliver in June or early July, then they can start making 3s in July. That may or may not happen. Production rate in July, if they have all the parts, will be very slow as they do quality assurance on the initial cars built. Maybe they’ll build a couple hundred cars in July if we’re lucky.

      2. James M says:

        Elon said in the Q&A that internal staff ordering would open in 3 to 4 months, but public ordering opens near production start. So maybe June will be the final reveal then public ordering is enabled.

        It’s a very savy strategy to pilot the initial ordering, production, and delivery processes to internal staff who will be most vocal yet at the same time forgiving. A great way to weed out issues in the beginning ramp of several thousand M3s before media and the public get their hands on them.

  6. CDAVIS says:

    Tesla said: “…“Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018…”
    ——

    Wow…Game-on TSLA shorters!

  7. AlphaEdge says:

    Here is some thoughts:

    Revenue:
    1,739 million via selling cars. (76% of the business)
    $254 million via car leases. (11%)
    $131 million via energy generation (solar cells) and storage (powerpack for commercial and powerwall for residential). (5.7%)
    $159 million via services and other. (6.9%)

    Expenses:
    $1,372 million car manufacturing. $367 million profit on making and selling cars.
    $171 million leasing cars. $83 million profit.
    $127 million energy generation and storage. $4 million profit.
    $177 million on services and other. Loss of $18 million.

    Operating Expenses
    $245 million on R&D. Payments towards engineers, building Model 3 manufacturing line, buildout of the Gigafactory, and I guess SuperCharger buildout.
    $456 million on Selling, general and administrative. This is huge. This also includes stock-based compensation expense.

    Gross Profit is heavily impacted by major R&D buildouts at this point in time for the company, so once M3 production maxes out, and Gigafactory production reaches max output, profit should increase a lot!

    1. AlphaEdge says:

      Another important thing, is $3.3 billion dollars in Cash (Cash and cash equivalents) listed on the balance sheet!

      Lots of cash on hand to pay for things.

      $663 million on Customer deposits. I guess, 663,000 Model 3 reservations?

      1. Nix says:

        Definitely not 663,000 Model 3 deposits, because that also includes Model S and Model X deposits, and those deposits are larger than the Model 3 deposit.

        But yes, a whole damn lot of Model 3 deposits. Somebody could do some math to guess how many S & X deposits are included, based upon how long the wait is in various parts of the world, and deliveries per month. But it will still be a whole damn lot of TM3 deposits.

    2. unlucky says:

      I don’t think gigafactory has to even max out. Which is good because that’ll be a while. It’s not even fully built yet.

      When Model 3 ramp is completed (and of 1Q 2018 at earliest, IMHO, depends on actual production start and ramp up) they should be turning good profits.

    3. realistic says:

      Just a few corrections to offer to your financial assessment…

      You’re mixing up various uses of the word “profit”. This wouldn’t matter to a layperson page like insideev’s but since you’re putting it in a shareholder letter perspective I think you need to be more precise.

      (1) All of your recaps of Revenue minus Cost of Goods Sold by business segment are addressing Gross Profit, not “profit” used generically. Sounds picky, but Gross Profit does not equal “profit”.

      (2) The R&D line probably would not include “building Model 3 manufacturing line, buildout of the Gigafactory, and I guess SuperCharger buildout”. Engineering expenses related to line design probably go to factory overhead or are treated as Capital (“self-constructed asset”). In the event they’re expensed in Factory Overhead, that is when they would “heavily impact Gross Profit” as you state later.

      These are seemingly tiny issues, but when a company and its shareholders hang on to certain key metrics like Gross Margin so overtly it’s important to keep them straight.

      As for Customer Deposits: I think this is an interesting one to ponder. Customer Deposits are actually down q/q by $20.8M. Now, if the order book for S and X is up by 49% over last year, with 47-50k Ms and MX deliveries expected by the end of H1, and many of those are reserved with $5,000 deposit, what does that say about the state of M3 reservations? I think they’re still at about 400k.

      1. Nix says:

        realistic — Deposits for the MS and MX have actually dropped to just $2500, and are no longer $5000. So that will impact the deposit numbers.

        Also, there was a huge backlog of MX deposits coming into 2016, before volume MX production began, so you would have to calculate how much of that has been satisfied.

        Like I said in a previous post, it could be possible to try and reverse engineer out the MX and MS deposits to find TM3 deposits. But just comparing to last year isn’t how to do it.

      2. AlphaEdge says:

        Yes, I should have indicated “gross”, but I was just providing a simple overview of some of the operating results. Not writing a “shareholder letter”.

        I thought for myself, it was an interesting “analysis”, especially the revenue breakdown.

        Anyone can go read the financials at sec.gov or tesla’s site if interested.

    4. Someone out there says:

      So in other words they make $367 million from producing cars but it costs them $456 million to sell them. Oh dear.

      This is to a large part the cost of running offices and showrooms so when they ramp up the model 3 hopefully it will even out.

      1. Nix says:

        No. You’ve falsely attributed all the overhead to just the automotive part of the company. That’s simply false.

        1. Someone out there says:

          Sure, a small part of it is from SolarCity but the problem was the same before the merger.

          1. Nix says:

            Based on the OP’s posted numbers, 24% of sales came from somewhere else than cars, with 76% coming from cars. So your comparison is off by about 1/4. Being off by somewhere above $100 million is significant enough to be ‘wrong’ in my book.

            1. Someone out there says:

              Fine. Deny reality all you want, it doesn’t change anything.

              1. Pushmi-Pullyu says:

                Trying to attack Nix’s credibility says a lot about your own, and very little or nothing about his.

                And if you haven’t noticed that Nix’s posts on InsideEVs are by far the most informative of any of us Usual Suspects, not to mention generally the most accurate, then that also calls your perception into question.

                1. Another (Euro) industrial point of view says:

                  OK, Nix is obviously very knowledgeable about Tesla but he is probably not the messiah either. I agree with someone out there that the item “Selling, General and Administrative Expenses” in Tesla profit and loss report is huge as compared to other car makers, therefor making their claims of high profitability at gross margin level not really credible (likely pushing some expenses under the “SG&A” carpet to make their gross margin look good). I have not yet looked at their 2016 figures however but it was very obvious in 2013, 2014 & 2015. Now that can probably be partly explained by their huge growth rate. Having a showroom network with a capacity to sell more cars than they do now in anticipation of growth. Which is not a bad thing as long as all happen according to plan. Now for sure thriftiness was never Their thing, this is probably the reason why they claimed they would not make “cheap” cars (cars under $35K). They are wise enough to know their own corporate DNA.

                  1. floydboy says:

                    You know what, I’m going to go with what TESLA says about earnings as opposed to conspiracy theories posited by you. Unless you can verify any of the myriad of negative nonsense you claim to be level-headedness is true?

                  2. Nix says:

                    I’m definitely no messiah, although I can turn water into wine (well, into beer, but that’s just a technicality).

                    But your first mistake was when you said “compared to other car makers”. No other car maker owns their own solar company, builds out their own supercharger system, owns their own distribution and repair facilities, or is anywhere near the level of in-house manufacturing as Tesla is. And no other car company is growing at the rate that Tesla is growing.

                    Find me a car company with the same growth rate, and the same level of integration, and then and only then can we talk about comparing numbers. Until then it is comparing apples to oranges.

                    ————————————-

                    As for the incorrect post that I responded to initially, let me explain what he did wrong.

                    Consider the case of a company that makes 4 products and sells an equal amount of each of those products. They have overhead for all of their products.

                    If the company attributed ALL of their overhead to 3 of their products, and claimed that 1 of their products had zero overhead, everybody would call BS. Because that would be BS. You can’t have 25% of your products you build have zero overhead.

                    That’s basically what he did. He claimed that all the overhead was on the 76% of Tesla’s production which is cars. And by exclusion, he claimed that 24% of what Tesla built had ZERO overhead. It is simply BS, and that is undefendable by anybody who is rational.

                    So this is yet another Rorschach Test for whether folks are rational and intellectually honest, or simply trolls.

                    If you are willing to believe that 24% of what Tesla builds has zero overhead, and all the overhead is for cars, you fail the Rorschach Test.

      2. Francois Charland says:

        Don’t forget they are -expanding- a lot , meaning a lot of new boutiques and service center to build.

        That has a cost, but at one one point, it’ll flatten out as enough is built to satisfy demand.

    5. James M says:

      “Gross Profit is heavily impacted by major R&D buildouts at this point in time for the company, so once M3 production maxes out, and Gigafactory production reaches max output, profit should increase a lot!” A conclusion I think that is fundamentally wrong. Remember master plan part deux, Elon’s growth strategy is to continually feed cash flows back into R&D of future product lines in the trifecta of vehicles, energy storage, solar. These are all world changing initiatives based on Elon’s ambitions, so we should expect R&D to be a major expense for many years to come.

  8. Four Electrics says:

    “Production on track.” Where have I heard that before, over and over again? Oh, right–the disaster that was the X launch.

    1. Pushmi-Pullyu says:

      Dude, are you still trying to short Tesla’s stock, even when the price is quite close to its all-time high, and with this news coming out which will almost certainly drive the price even higher tomorrow?

      ROTFL!!
      😀 😀 😀

      You must be one of the worst investors in the world!

      1. ¯\_(ツ)_/¯ sven says:

        Pu-Pu,

        On February 22, 2017, Tesla closed at $273.51 per share, and that evening Tesla released its Q4 2016 earnings. The next day, February 23, 2017, Tesla dropped like a rock and closed at $255.99 per share, down a whopping $17.52 or 6.4%.

        Do you have any other hot stock tips Mr Buffet? HAHAHAHAHA!

  9. ModernMarvelFan says:

    “Tesla tightened up its early Q4 estimate for sales on the Model S and Model X, noting it sold 22,253; meaning that full year sales of its two models ended up at 76,230 – missing earlier guidance of 80,000 units to be moved.”

    And nobody cared about this big “miss”.

    I would have thought that this is the so called big news! That is missing the “bottom” of their guidance from last year!

    Well, at least Tesla keeping my M3 reservation on track, so they say…

    1. Nix says:

      That’s because it wasn’t really that big a miss. They were 3370 Units short, which is just 2 weeks worth of sales in the 4th quarter.

      Coming up short by 2 weeks of sales is not a “big” miss out of 52 weeks.

      1. Nix says:

        Also, that is not even “news”, since we’ve known about it for months.

        So not “big”, and not “news”. So definitely not “big news”.

  10. realistic says:

    Boy, the Solar City business is certainly weak.

    Q3 2016: Tesla Energy (just storage batteries) revenue was $23M and SCTY was $200M.

    Q4 2016: Combined, the two form “Energy Generation and Storage” equaling $132M, and that’s with a greatly expanded storage battery shipments.

    Also, the total cash brought over from SCTY was $85M. That’s all. They were clearly hurting much more than I thought.

    Wow: what a crummy acquisition. Not that anyone is counting this at all. The shares issued to buy out SCTY holders are worth more, so certainly there wasn’t any dilution resulting.

    I’m guessing the $150M of “synergy savings” will accrue largely by shutting down the former SCTY business model altogether and halting the lease business.

    1. Nix says:

      Solar City is being completely revamped to become a Solar Roof company, using Tesla built inverters that are more efficient and cheaper than Solar City’s previous supplier. That is on track for a mid-2017 launch in California, moving east from there around December. They are taking reservations for the future, so like the TM3, and PowerWall II, folks will have to get in line.

      I see no reason why they would be building on their old business model while they are focused on their entirely new business model. I don’t see any red flag there.

      1. Pushmi-Pullyu says:

        Considering that SolarCity’s business model was pretty clearly failing — thus the need for, apparently, a buyout to avoid bankruptcy — it’s a good sign that Tesla is directing it to a completely new business model.

        Hopefully SolarCity won’t wind up being the albatross around Tesla’s neck that I thought it would.

        1. Nix says:

          Yea, I had my doubts until I saw the Solar Roof presentation. Just moving their sales to Tesla stores and making them Tesla’s own solar provider wasn’t going to be enough.

          But between their solar roof, using their own inverters, and their plans to completely revamp traditional roofing delivery and installation structures, they actually have a chance at something big.

      2. realistic says:

        Not looking for an argument… merely your perspective.

        Tesla issued $2.6B in shares to acquire this shrinking, debt-ridden business that basically needs a complete redo, plus the $85M net cash they had left.

        What is a better idea: buying SCTY or a cash raise of ~$2.2B (after underwriter fees) with the same shares?

        1. BenG says:

          The purchase price seems a little hard to justify, but I like the overall idea and think solar does go well with Tesla’s battery pack and EV biz.

        2. Nix says:

          In my experience, people who say they aren’t looking for a fight are usually looking for a fight.

          As to your strawman, I reject your underlying premise that the only thing Solar City brought to the party was cash. So your question cannot be answered as the question was falsely constructed into a strawman fallacy.

          I have no desire to assist you with your strawman fallacies.

    2. Zach says:

      Keep in mind there is a lot less sun in the fall to winter months. Tesla looks like it is shutting down most of SCs lead generation strategies outside of tesla retail, free media and referrals. That is going to hurt growth of the business, but should help a lot with cash flow. It looked like some of the marginal leads solarcity was using cost over $2 a watt, which isn’t even remotely sustainable.

      1. realistic says:

        So basically SCTY was on the verge of bankruptcy with a broken business model in virtually every regard (excessive cost and a leasing model that never really made sense) but it was worth a $2.6B TSLA share issuance anyway?

  11. Someone out there says:

    I will be happy to be wrong if Tesla manages to get serious production going by September. I expected them to be 6-12 months late.

    1. Pushmi-Pullyu says:

      As will I. I predicted about 6 months late, with only a token few Model 3’s delivered at a media event at the very end of the year. (So did at least a few of the other Usual Suspects here.)

      If Tesla really can crank out 25,000+ Model 3’s this year, then I will be ecstatic to have been proven so wrong!

      But that’s definitely counting chickens which have not yet hatched.

      Go Tesla!

      1. PP says “But that’s definitely counting chickens which have not yet hatched.”, and I say, we still have only a faint idea of the process of internal and external component inventory build up in preparation of the start of the production line!

        Still a bit hard to be either pessimistic or optimistic yet, but less hints towards the negative, suggest a more positive flow than many spoke of! (Like, December 2018 production start, as I have read here!)

  12. realistic says:

    And, FWIW, Tesla won’t utter a peep on M3 reservation count, just as in the last two shareholder meetings. Wheeler’s answer may (or may not) give some hint, depending on your bias: “We are still in great shape … we don’t want to make the line longer.”

    1. pjwood1 says:

      Not listening, but that tells me they’re still goal’ing to get people from Model 3 to Model S. Thus, a good shrink of the line.

    2. ItsNotAboutTheMoney says:

      Because it’s a no-win situation to talk about the reservation count. It’s high enough to provide a production backlog, and to discourage further reservations. So they’d just get stupid headlines like “Is Total Model 3 Demand Only 400,000?”, repeating the same nonsense from the Model S release where people treated the reservation list as the total demand.

  13. ffbj says:

    Musk also wants 5 gigafactories. He said in the past that will need 100’s as a planet. I would imagine that’s years away, and likely not near the production facilities for future needs for foreign countries.

    1. ffbj says:

      I mean near the production facilities…

    2. toni says:

      He said that we will need 100, not 100’s. Only 100!

      1. ffbj says:

        Right, my error. Actually I knew I just wrote it wrong.

  14. DonC says:

    Have to be excited by the news. Just hope it actually happens. Didn’t think they could do it by the end of the year. That they are on track to beat the date is either very good or not so good news. Will be clearer after the first thousand or so.

    Will also be interesting to see how Spartan the interior is. Personally I can’t see not having a DIC but maybe it will work.

    1. ItsNotAboutTheMoney says:

      I have a Gen 3 Prius. It has a central display, with the key driving information on the driver’s side.

      It’s really a non-issue because you don’t have to move your head to look at the information, and in fact it could be better because the focal length is greater than if you were looking at a display in front of you.

      However, I think that Tesla may include a HUD, even in the base model. It’s not expensive and the simplification of the dashboard would offset some of the cost.

  15. Nix says:

    “With only about $3.4 billion on hand, and not likely to turn a profit anytime soon, one can expect another round of capital raising is likely imminent.”

    Tesla also secured something like $1.8 Million in lines of credit last year, so they definitely could get by without raising capital.

    But why the heck would they, especially if TSLA shares really to through a short squeeze? The people buying stocks will be people who need to cover their short positions, so why not take their money?

    I see a zen-like poetry in selling new shares into a short squeeze, like Tesla did way back in the beginning. Nothing better than having people who short your stock fund your growth from their losses.

    1. Nix says:

      Lots of typos. Must get more beer to recharge fingers.

      %s/$1.8 Million/$1.8 Billion
      %s/really to/really go

      1. georgeS says:

        Nix:
        “Lots of typos. Must get more beer to recharge fingers.”

        LOL A man after my own heart:)

    2. cmina says:

      Or, how trump would put it:
      Raising capital and make the shorts pay for it.

  16. Mister G says:

    Tesla should buy Ford or GM in 2018 and just produce electric vehicles at newly acquired facilities.

    1. Would that make UAW leave Freemont alone, or make them push harder to get in there?

      1. Mister G says:

        I have no clue but if Tesla employees want the UAW let them unionize and if they don’t that’s fine by me. Just make high quality cars that are going to pollute less.

  17. Kevin C. says:

    I’m just tickled all this will add further downward pressure on existing Bolt and Leaf prices. Hell, even das model S.
    More EVs for the masses!

    Especially since I have a paid membership in that unwashed body.

  18. Niels says:

    I think they have around 600k+ reservations bij now.

    X/S with shorter production time i think around 15k reservations x 2,5 k

  19. JeremyK says:

    Still confused by the short amount of time between these pilot runs and serial production. I don’t see enough validation timing built into this schedule. Not even close actually.

    GM had up to 100 Bolts in the wild almost a year before the car went into production. There are ways to accelerate component testing, but eventually all of those components need to be tested at the VEHICLE level (mule vehicles don’t count). That simply takes time.

    OEMs around Detroit use 3rd party test drivers from companies like Roush to accumulate miles quickly…but it still takes many many months to sniff out problems.

    If Tesla goes into high volume production with a design that is not fully validated, they are setting themselves up for bankruptcy. “IF” they actually ramp to 10K/week they could end up with 50+K vehicles in the field before they even know they have a design issue. Not something on OTA update can fix BTW for all you noobs that think everything can be fixed with a software update.

    1. bro1999 says:

      Tesla rushing things to meet the deadlines they imposed on themselves.

      Hope the initial Model 3 owners don’t mind doing the pre-production testing for Tesla!

      1. William says:

        That is a beta tester who will be driving automotive history in the making. Should be a huge turning point in Legacy Automotive Manufacturings dependence on one Fuel source coming from some rather unpredictable regions of the globe.

      2. James M says:

        That will be 10,000 staff, and that is by design. Better they be accountable for their own quality, than give the media & general public a go immediately.

    2. jelloslug says:

      If they have already crash tested cars they are much further along than they are letting on.

      1. realistic says:

        Not at all. Crash testing of hand-built BIW structure to validate design models is not a sign of readiness to manufacture. Here’s but one tester who deos the work; there are several in the US:

        http://www.calspan.com/services/automotive-safety-testing/body-in-white/

        1. Nix says:

          The same company also does 2019 NCAP testing.

          http://www.calspan.com/services/automotive-safety-testing/research-custom-tests/

          IF they were doing testing for Tesla, it could have been any number of different tests, not just Body in White.

      2. unlucky says:

        I see a lot of people quoting this kind of thing to indicate that Tesla is very far along.

        But there’s a problem, crash testing is part of validating the design and engineering. You can show that the design is safe and in that way you do really reduce a lot of risk. But that’s really a milestone closer to Musk’s “pencils down” comment than to getting cars produced.

        See, once you have a design then you have to figure out how to produce it in quantity. In effect, you make one prototype by hand, prove it is good and then you have to spend a lot of time figuring out how to make a lot of vehicles identical to the prototype. You have to do a lot of production validation.

        And it’s a long process. Even if Tesla could lock the design completely it still leaves a lot of time remaining to get the line set up and producing vehicles identical to the prototype. And to make it worse, often you find you cannot mass produce vehicles identical to the prototype and you have to make some small changes to improve yields, cycle time or just plain make it possible. Then you have to retest with those changes.

        It’s a long process and I know Tesla is doing everything the can to reduce the length of the process. But it (basically) BEGINS after you validated the design/engineering with crash tests, it doesn’t end with that.

        I’m sure Tesla has crash tested structures and that’s great. But without knowing when it was done, simply knowing they did it before today (or even before this month) doesn’t mean they are on track for mass production soon.

        1. realistic says:

          Well-stated, unlucky, especially this: “But it (basically) BEGINS after you validated the design/engineering with crash tests, it doesn’t end with that.”

          yes yes YES

          I think that people unfamiliar with the industry are so enamored of Tesla and so convinced that they know beyond doubt: nothing is so difficult and so well-established that it can’t be done more advanced and better in Silicon Valley. Sadly, the tired old structural engineers in Detroit, Nagoya, Stuttgart and even Hyderabad do this very well and are constantly under pressure to do it faster and with less cost. The processes are highly unlikely to be more refined or magically faster in Fremont. It doesn’t mean that the Tesla team can’t do it or can’t do it as well. But the belief that they have already achieved a completed and validated body structural design “because Elon… and rockets!!!” is just that: belief, and nothing more. Musk’s OWN REMARKS about the very incomplete state of dies are the closest you’re going to get of prima facie proof that the car is making good but normal progress.

          I can’t say enough that none of this skepticism about extraordinary schedule compression implies that Tesla won’t build a great car. I have no opinion about the endpoint because there’s nothing out there to examine. There wasn’t for the Bolt at this point, either, so again, no cruel words here.

          But a fully-validated production ready design and facilitization for Model 3 before January of 2018 is just not in the cards.

        2. Nix says:

          “often you find you cannot mass produce vehicles identical to the prototype and you have to make some small changes to improve yields, cycle time or just plain make it possible. Then you have to retest with those changes.”

          Tesla began unit testing of that back before October of last year on their Production Assembly Line (source posted many times — ibid).

          No, it isn’t the same as putting everything together at one time like they started on Feb 20th. But they definitely CAN cycle through sub-assemblies as a unit, and be prepared well before Feb. 20th, doing a lot of the work you posted.

          The more unit testing they do, the less issues like the ones you posted about will show up in full full end-to-end assembly testing.

          ———————-

          I would guess that some of the sub-assemblies tested on the Production Assembly Line were later completed by hand into complete cars that were then crash tested. So Tesla could have been crash testing as far back as last fall using sub-assemblies off of the Production Assembly Line. Even earlier with 100% hand built units. Tesla ordered enough parts for 300 cars way back last spring/summer (ibid, source posted many times).

          Are you claiming that those tests aren’t valid, and they are no closer to building a production version until they start crash testing cars built on Feb 20th or later?

          I would contend the opposite is also possible. That it is at least as likely that they may have already completed all of the crash testing required to design and develop production ready units, by hand completing sub-assemblies that came off of their TM3 Production Assembly Line into complete cars using that set of 300 parts, and crash testing them. They have had plenty of time to build/crash/re-design/build/crash/re-design multiple times.

          ——————————

          Just because we haven’t seen those tests, or those cars, doesn’t mean it didn’t happen.

          In fact, this new bit of information about crash testing pretty much proves my statements before that MORE Model 3 test cars existed that the 2 we knew about from the reveal. They built them and crashed them at the same time I was saying more cars likely existed, and you were saying that if we didn’t see them they didn’t exist.

          1. unlucky says:

            Just because it could have happened doesn’t mean it happened.

            Yes, crash testing could have been happening as far back as last fall. I didn’t preclude that. What I actually said was that just because we know crash testing has happened by now doesn’t mean it happened early enough for them to make significant progress on developing the production process.

            I am as certain as you (which is nearly certain) that there have been more than prototypes made before now. But beyond that we disagree greatly. You are latching onto a point relating to crash testing, sowing doubt upon that schedule and then assuming that if that isn’t true then everything must be false and cars are near to coming out the side door of the plant.

            If you haven’t tested the car extensively on roads then it isn’t time to produce it yet. We know Tesla has not done this. As I said above, even if they did test it on their pinched loop track thats still not nearly enough testing to lock the design/engineering and proceed to production. Not without massive risk that you will find out something wrong and have to reset late in the process.

            Companies (meaning non-Tesla) don’t just road test their cars to so they can give Brenda Priddy a chance to take pictures of them in camo. You need to test in many different situations to know the design will work in many different situations. And you simply can’t do that indoors or on simple loop tracks. We’re far past the time when we should have seen Model 3s on the road in numbers if it were to enter (saleable product) production in summer.

            Could Tesla ignore this? Yes. They could just produce it anyway. But it’s a huge risk and very likely to bite them with a disastrous project schedule reset.

            I’d like to think Tesla aren’t dumb enough to take that risk. The potential downside costs on a mass-market car would just be too big. So I choose to believe that instead they are at a point in the schedule more commensurate with the information we have. Of course, it’s all just (at best) educated guessing, right?

            1. Nix says:

              “If you haven’t tested the car extensively on roads then it isn’t time to produce it yet”

              Yes, they have to road test.

              No, they don’t have to do that road testing on PUBLIC roads. There are road test facilities that allow that testing in private. We don’t know if Tesla has done this or not. But we do know that Tesla has previously used a 820 acre private test facility in the past. So it is YOU who cannot say that Tesla hasn’t done any of that testing just because it hasn’t been photographed. And that means you can’t use the ‘pics or it didn’t happen’ meme as supposed proof that you know better than Tesla where Tesla is in their testing cycle.

              No, they don’t have to do that exclusively in final cars. Extensive testing that finds bugs in Mules and Prototypes will find those same bugs (and fix them) long before final cars.

              No, they don’t have to follow what GM does, or show their work in public.

              —————

              “just because we know crash testing has happened by now doesn’t mean it happened early enough for them to make significant progress on developing the production process.”

              Except of course the fact that Tesla has announced they are on track for July manufacturing, which implies that they HAVE made significant progress. Where you have nothing but your ‘pics or it didn’t happen’ meme to support your claims that it hasn’t happened.

    3. realistic says:

      Tesla is nowhere close to a car built off-tool, much less off-process. I’m not saying they’re hopelessly behind or anything like that. But because most of us reading and posting here aren’t familiar with the development process we can be misguided by enthusiastic comments. Crash testing is one example. When Musk and team talk confidently of recent results, you’d be wrong to think there’s actual production intent Model 3’s being tested. That’s certainly not the case. This testing is done with prototypic hand-built Body-in-White structures propelled down rails (I’ll bet Calspan is the entity doing the testing).

      Tesla has NOT built real off-tool body structure. Here’s the proof from the conference call. Question from Jeffrey Osborne Cowen & Co.:

      “I believe at the Gigafactory event on January 4, you mentioned that there was some equipment, stamping tools and whatnot that needed to be put in place in Fremont. I was just curious, A, if those showed up, and then, B, if you can just update us on what needs to be done from just a physical capacity to make the vehicle in July?”

      EM answer:
      “Yes, and we’re busy pulling out … [?] … the stamping facility right now. The open question is not whether the stamping line will be here. It’s going to be here well in advance of the Model 3, but it’s like the question is really how long does it take to work out the bugs in the stamping line? And how many iterations does this one have to go through to get it operating smoothly? But it’ll all be here and it’ll be a hive of activity, and I’ll be personally down there looking at the line as I was with the Model S line and I’m confident that I don’t think that’s going to be an issue.
      There’s some long lead stamping tools, the stamping dyes, and there’s a lot of them. And there’s some sort of fairly obscure sounding dyes. Like, there’s like one dye for the seat frame. It’s currently a long lead item. But since we know about it, we’re attacking it, and that’s unlikely to be a schedule driver. So, things that are likely to be schedule issues are things that we actually just don’t know about today. And if we know about, we’re attacking vigorously.”

      TL/DR version of Musk answer: the dies aren’t all here yet. We haven’t developed the stamping processes yet; we sure as hell haven’t done process validation.

      You can insist all you want that “Tesla won’t develop production processes in the same dumb old way as [fill in the blank of manufacturer].”

      Cool. I suppose that they’ve now revolutionized body panel stamping as well, based on the exceptional panel and joining accuracy shown in their high-end, high-labor luxury models (that’s sarcasm, BTW)? FWIW, the Audi body panel fixture development and quality requirements are the most extensive and, in lead time terms, time-consuming in the industry to achieve their exceptionally low level of variability. And Tesla’s mfg god is from…

      I’m NOT saying Tesla can’t build this car. But I am declaring with some reasonably good technical knowledge that more than 1000 cars before end-of-year with complete, safe homologation and passable quality is all but impossible.

      1. georgeS says:

        I hear you realistic.

        but Jay’s the only one that really understands. At some point you just give up trying to predict things because in most cases all (I) do is get it wrong anyway.

        All you do is present the latest update and move on.

        So I’ll see you all in July. That’s when we will learn more.

        Has Tesla really been testing the heck out of these cars in private, under wraps as Nix is suggesting??

        Who knows.

        Personally I don’t think so. I think serious alpha testing is starting now. That was the Feb 20 start date that IEV’s reported for “pilot production”…..call it what you want but as you point out the line is not up and running now.

        So with a few crash tests done and some limited alpha testing so far Tesla now has 5 months more of alpha testing till the July production date….and as JeremyK says those July cars are not going to customers. They are going to “employees”. My guess is these “employees are test drivers and are not paying for these cars.

        So Tesla then needs a couple months of testing these “non sellable” production cars before they start selling real sellable cars to paying customers. So sept at the earliest for sellable cars.

        1. Nix says:

          “Has Tesla really been testing the heck out of these cars in private, under wraps as Nix is suggesting??”

          Just to be clear, I’ve been saying that Tesla is much further along with unit testing and early prototypes than people generally seem to acknowledge. I’m not saying that full Production Assembly Line builds began before Feb 20th. Feb 20th is the first time the formal production line took parts and assembled complete cars on the assembly line.

          To be clear, not all stamping machines are part of the formal Production Assembly Line. Just like a seat frame can be stamped by a supplier, and then the entire seat sent to Tesla, that seat frame stamping machine is not a formal part of the assembly line.

          What I’m saying is that people have been giving Tesla less credit for things none of us have been allowed to see. Here are some examples of testing that Tesla has done in the past, that we haven’t been allowed to see. All of these are examples of testing that has been reported previously, and I’ve previously posted links for (ibid):

          1) Unit testing of the Production Assembly Line began last Oct.

          2) Crash testing has already happened.

          3) Tesla completed their inverters for the Model 3 over a year ago, including testing.

          4) The first hand-built cars were build a year ago, and they had drivetrains that would have had to have already been Mule tested in a Model S before they were ever put into a hand-built TM3. This goes along with #3, where they would have had to have had a drivetrain to test those inverters. (this last part is speculation, the first part is well reported fact, like the other points).

          So what do we know?

          1) Tesla does work (lots of work) on the Model 3 that we’ve never been allowed to see, but we know has happened.

          2) All the claims that start with “we haven’t seen XXXX” doesn’t mean it never happened. I just listed a FEW of the “we haven’t seen’s” that we know actually happened unseen.

          My claim is that there is likely much MORE development work that none of us have ever seen nor even heard of. Of course I can’t prove that, because we’ve never seen nor heard of it. My evidence is that we consistently keep getting reports of work that has already been done, after it has already been done. Based on that pattern, it only makes sense that there is yet more work that has already been done, which we simply haven’t heard about yet. The only logical conclusion is that Tesla is “More Likely Than Not” further ahead than what is publicly known. Furthermore, it is false to claim that if we haven’t already seen it and know about it, that it means it hasn’t happened. That does not historically match what Tesla has done in the past.

          I don’t think that is an outlandish supposition.

        2. Nix says:

          “My guess is these “employees are test drivers and are not paying for these cars.”

          That doesn’t sound like a guess that is supported by the facts. Nobody gets a free Tesla, or even a discounted Tesla. Not even Elon. Not his friends or family. Not employees.

          The only way to get a discount on a Tesla is through a referral, or by purchasing a “new” car with miles/months of time as a demo or inventory car.

          They definitely aren’t handing out cars for free.

          http://money.cnn.com/2016/09/30/technology/tesla-elon-musk-discount/

          “There can never — and I mean never — be a discount on a new car coming out of the factory in pristine condition,” Musk wrote. “This is why I always pay full price when I buy a car and the same applies to my family friends, celebrities, no matter how famous or influential.”

          1. unlucky says:

            Do you understand how product testing works? The poster is suggesting that the cars produced at that time wouldn’t be saleable, they would be validation units given to customers for what would be called in the software world “alpha testing”. He’s not suggesting they are giving away saleable product, but instead building units for testing and having their employees they are already paying do the testing (known as dogfooding).

            1. Nix says:

              The cars being delivered as early as July are Production cars to employees who put down deposits and put in a reservation, completely separate from their job duties.

              Yes, company QA’s will get take-home pre-production test cars that they will never own, and will be returned to the factory where they will eventually be parted out and recycled (that’s the law).

              The cars made as early as July and delivered to customers to keep are NOT those cars. The cars built staring Feb. 20th are those test cars.

              These are cars that these Tesla customers (who happen to be Tesla employees) are purchasing to keep as their own property, and that they have already put down $1,000 in their own cash as a deposit.

              What part of reservation holders who are employees getting the first deliveries do you not understand?

              1. unlucky says:

                Who at Tesla said that? Tesla said production in July.

                The part I don’t understand is where you are assaulting me for not acknowledging your own assertions as truth.

                You’ve taken a Musk quote out of context about denials that Tesla was selling cars to customers at a discount and trying to say it would apply to how they would treat their employees.

                And a Musk quote which was a lie, by the way. Tesla was giving many discounts at that time, employees were told to shift cars out before the end of the quarter and they did so. Musk then tried to reset expectations so they could return to selling cars at full price in the quarter. This statement from Musk was vapid when he made it and it’s not at all relevant to the situation we’re discussing right now.

                1. Nix says:

                  The reservation system is well documented on Tesla’s website.

                  No, Musk absolutely was not “lying”, and you know it. This has all be detailed. A small number of Inventory vehicles, which have always been discounted based upon miles/months in service (as detailed many times by Tesla) were given a bigger discount than the miles/months justified.

                  That quote was not Musk saying it didn’t happen, that was Musk making sure Tesla’s long running policy was understood by everybody. Customers, employees, managers, everybody. You know this.

                  You, like a fool, are now making up a lie, and pretending like you don’t know the context of that quote. In the process you are making an absolute fool of yourself.

                  Why do you come here to lie and make a fool of yourself, just to attack Tesla from every angle possible? What made you such a childish, bvtthurt little liar?

      2. unlucky says:

        I do agree that some people including Musk get overhyped about what they can “revolutionize”. I’m sure you can improve metal stamping but to think Tesla is going to produce the same results as others in 1/3rd of the time simply by not being afraid to start from scratch is silly.

        Tesla have in the past convinced themselves they can change things faster than they actually can because they feel they have hired the best and work hard. They somehow convince themselves that everyone else just doesn’t know what they are going so in typical Silicon Valley fashion they are going to do it quicker, cheaper better. But it isn’t always so.

        As I’ve said before even if you do everything in house, some processes just take time. You can update and deploy a website in hours, you can’t regrind a die or reconfigure a line in that time.

      3. Nix says:

        “FWIW, the Audi body panel fixture development and quality requirements are the most extensive and, in lead time terms, time-consuming in the industry to achieve their exceptionally low level of variability. And Tesla’s mfg god is from…”

        And FWIW — The same guy you mentioned said that Tesla was far, far head of what any other car maker was currently doing on their assembly lines.

  20. tech_eval says:

    Tesla is totally making up these dates. Think about what they didn’t say: 1) no configuration available yet — and we’re only 4 months from July
    2) no M3 reveal — because the design isn’t ready
    3) no update on price
    4) no update on reservations

    1. Nix says:

      tech_eval is clearly not good at market_eval.

      “1) no configuration available yet”
      This is a marketing decision, and has nothing to do with engineering or manufacturing. They don’t want people configuring Model 3’s on their website, they want people who hear about the Model 3 to go to their website and configure a Model S or X. Then they want them to buy an S or X now, then buy a Model 3 later.

      “2) no M3 reveal”
      A Reveal Event is a marketing event, not an engineering decision. Tesla doesn’t need any more marketing for the Model 3 at this point in time, and they’ve said so. They are actively marketing the MS and MX, not the 3. You misunderstand why and when Tesla would do a final reveal, since they have already done a soft reveal that’s successfully done its job of attracting interest. In fact, it was WAY more successful than even Tesla ever expected. The last thing Tesla needs is a marketing event to drum up more interest in the TM3 at this point in time. They are already way too overexposed when it comes to the TM3. Google “osborne effect”

      “3) no update on price”
      The price is already set. What kind of update do you expect for a price that has repeatedly been confirmed over and over?

      “4) no update on reservations”
      Again, that’s a sales and marketing decision, not an engineering or manufacturing decision. And Tesla has stated that they are not actively marketing the Model 3.

  21. GeorgeS says:

    Just as a follow up this AM. After reading all the comments..especially Jays musk quote on spplier delivery dates:

    “So, when we place parts orders with our suppliers, we’ve told them 1,000 a week in July, 2,000 a week in August, and 4,000 a week in September. These are parts orders. Then the parts need to arrive. They need to be turned into a car. And the car needs to be delivered to customers”

    But then we have:

    “model 3 production in july”

    It doesn’t seem like musk has enough time between the 1000 parts delivery and getting the first vehicle off the line.

    Seems like august would be a better estimate.

    Now add the suppliers that miss the july bogey and it looks like sept for the first prod cars to employees.

    1. Jay Cole says:

      While Musk didn’t speak of part orders before the 1,000 week at some point in July, one assumes Tesla could have a limited run order in the queue for initial production even now.

      Fair disclaimer: I have no actual knowledge of that supposition, or evidence to support it, just throwing it out there, (=

  22. ModernMarvelFan says:

    ““Initial crash test results have been positive, and all Model 3-related sourcing is on plan to support the start of production in July. Installation of Model 3 manufacturing equipment is underway in Fremont.”

    Is it going to get a “Good” rating on the IIHS small overlap frontal offset crash now?

    Plenty people claimed that Tesla Model S would have aced it… But it turns out it didn’t.

    That test was added in 2013.

    1. Nix says:

      Wow, Tesla gets one “Acceptable”, and 4 “goods” out of 5 tests (19 out of 20 points) and you would think the sky had fallen from the way some people talk about it.

      1. unlucky says:

        The issue is that Musk repeatedly calls the car the safest in the world. When you do that you do open yourself to criticism if you aren’t actually the highest rated car.

        Or if, for example, you’ve produced cars for 5 months that don’t even have automatic braking.

        1. Nix says:

          Dude, like I said, they got 19/20 points in the collision test. And that 1 point they missed was due to an issue that they have resolved in current production cars.

          Like I said, more childish vindictive whining from yet another anti-Tesla loser who can’t handle how successful Tesla has become.