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Tesla's Model 3 volume production target pushed back again
- slg 9y agoMissing production targets is obviously bad, but after giving this announcement more thought it doesn't seem like awful news if you put this in context with other EVs rather than Musk's always overambitious projections. Tesla says they are producing Model 3s at roughly 1000 per week now. Considering they are selling Model 3s as soon as they can build them, that would make the Model 3 already the 2nd best selling EV. The top seller is the Model S at a little less than 1,200 per week. The way production is currently ramping up the Model 3 will become the best selling EV sometime in mid January to early February. That isn't as fast as people wanted, but I don't see how this would be a sign of some overall failure with long term side effects rather than a temporary stumbling block as they ramp up production. If I was a long term investor of Tesla, I don't think this would have me worried and I might even try to pick up some extra shares tomorrow at a discount.
- rweba 9y agoI understand that people are reacting to the "missed expectations", but the reality is that everyone knew that their original production goals were very aggressive. Here's the bottom line: If Tesla originally planned to produce 250,000 Model 3s in 2018 (5,000 per week * 50 weeks) and only ends up producing 150,000 (1,000 per week for 6 months + 5,000 per week for 6 months) I don't think that's going to be a problem in the long run. Their only real competitor right now is the Chevy Bolt. The Bolt has similar range and price to the Model 3 but it has at least 2 disadvantages: (1) GM is not really aggressively pushing the Bolt, allegedly because it is selling them at a loss (2) Tesla has the super charger network. Conclusion: These delays don't like they will have any long term impact.
- dx034 9y agoTheir constraint is not competition but cash. They already have a lot of debt. If they cannot ramp up production as forecast, future cash injections could be hard to get.
- selectout 9y agoTesla essentially went from test production in Q3 to matching Model S/X weekly production by the end of Q4. While they are still ~6 months behind schedule, the way they are able to kick off an entirely new line is still impressive in it's own regard. Remember, Elon Standard Time.
- drewcon 9y agoThis article caused me to become very bearish on Tesla. https://dailykanban.com/2017/12/go-production-hell-went-production-heaven/ https://dailykanban.com/2017/12/go-production-hell-went-prod... Not on EVs in general, but just on their ability to actually outpace delivering the market (without killing anyone) before the old guard caught on and gets there first. Not a novel thought, but the factory analysis really put the nail in the coffin for me.
- mmanfrin 9y agoI've come to see Tesla as being very bad at production lines. I've heard almost nothing but bad news about working conditions, safety, output, etc. Top it off with the massive firings that happened right as the Model 3 production was set to ramp up. However, I'm bullish, because these are solved problems that many other people have expertise in. It's easier for Tesla to find someone skilled in car manufacturing than it is for other manufacturers to build the brand demand that Tesla has. They have solved the hard problem, but failed the easy. And when they figure out how to build cars faster, the demand is there to meet them, which means that when they solve that easy problem, they will be sitting pretty.
- rsynnott 9y ago> However, I'm bullish, because these are solved problems that many other people have expertise in. Which raises the question, why didn't Tesla hire experts, like the company in the article? I suspect because Musk thinks his way is best, and, worse, hasn't yet realised that he's wrong. This would make me very concerned about Tesla's future. Ultimately, if Tesla goes bust, the brand will presumably be sold off, and someone who knows how to make cars will make Teslas, I suppose...
- bdamm 9y agoIs this really the "easy" problem? I've often wondered to what degree maneuverability or parts availability influences car maker's designs. If the design fundamentally requires parts that are single-source or difficulty to manufacture, as Tesla's design must be, then it's a difficult problem.
- PunchTornado 9y agoApple struggled with the production of their first iphone too. The good thing is that you have tons of orders and market hype. market hype. market hype -> This thing is invaluable.
- melling 9y agoThis isn’t Tesla’s first car. They shipped 100,000 cars last year. Must be a problem making the battery?
- olivermarks 9y agoI've heard they continue to have had big steel welding problems. Earlier cars were composites and aluminum but ramping up production of steel cars is a very different manufacturing technique. http://autoweek.com/article/car-news/tesla-might-be-missing-spot-weld http://autoweek.com/article/car-news/tesla-might-be-missing-... The rumors have been they are still using 1980's manual production line techniques https://www.harborfreight.com/welding/spot-welders/240-volt-spot-welder-61206.html https://www.harborfreight.com/welding/spot-welders/240-volt-... Th
- scrumbledober 9y agoInteresting to hear someone having problems welding steel instead of aluminum. Generally Al welding is much more difficult than steel.
- olivermarks 9y agoRobots seem to be better at welding aluminum than unskilled humans, they appear to be ok with spool guns and adhering to consistent tolerances and settings. Until now Tesla has mostly been attaching composites to aluminum monocoques using relatively low production run specialist car building techniques. Banging out masses of low cost cookie cutter cars is a different dynamic involving lots of spot welds...
- mohaine 9y ago
- flunhat 9y agoHow long does Tesla have before it runs out of cash? I know they just had a bond sale or something, but I'm fuzzy on the details.
- hndamien 9y agoI'm going to go out on a limb and suggest that the crypto boom is going to produce a handsome windfall for tesla.
- _ph_ 9y agoOne has to add the over 800 Model 3 which were made, but not delivered to the customers yet. So they made about 2300 Model 3 in Q4. And Tesla claims to be hitting a rate of 1000/week in the last days of 2017. So the production speed is picking up for sure. Not as fast as promised, but it is picking up, and probably will continue to rise significantly across Q1.
- dx034 9y agoBut why weren't they delivered? Because they couldn't ship them fast enough or because the cars aren't finished yet?
- _ph_ 9y agoBecause they were made in the last week of the year, and it takes a couple of days to ship them to the destination service center which has to make an appointment with the new owners to do the delivery and finish the paper work. Tesla counts a car as deliverd only when the new owner has taken posession of the car. So Tesla always has quite a few cars in transit - about 2000 S/X and the end of Q4 and over 800 M3. Deliveries to the east coast and of course Europe take accordingly longer.
- Cshelton 9y ago"In the last seven working days of the quarter, we made 793 Model 3's, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week" - from Tesla's release. Also another 860 Model's in transit currently that will count in Q1. It's getting there.
- aidenn0 9y agoso they almost hit 20% of their goal from 6 months ago?
- Robotbeat 9y agoIf it's an (initially) exponential ramp-up, yeah? Relatively speaking, it's still a fast ramp-up rate.
- aidenn0 9y agoI guess I'm just wondering what fraction of investors decision to hold TSLA is "We never believed Musk's deadline to begin with" and what fraction is "It's only a 6 month delay, so not a big deal"
- Klathmon 9y agoFrom my point of view it looks like they are trying to do something that would normally take 5 years in 2. Even if they "fail" and it takes 3 years, that's still faster than the "normal" way.
- rsynnott 9y agoThat's assuming that they take longer than they said, but still get a functioning plant. They could, alternatively, after 3 years, end up with a plant that doesn't work, and won't work in another three years. Manufacturing is difficult, and "delayed" isn't the only failure mode.
- Animats 9y agoMost auto final assembly lines build about a car a minute. Running two shifts, 5,000 cars a week is about normal. If the line is running much below a car a minute, or is stopping much, something is very wrong. It's not a fundamental problem. It's Musk trying to put an assembly line into service too fast. An assembly line is a custom-built machine about a thousand feet long. They take time to debug, and people who've done it before. Usually, most of the debugging takes place off-line in supplier factories before the final line is assembled in place. Tesla skipped that step to save time. Doing it that way is insanely expensive. The operating costs are roughly constant regardless of the number of cars that come out, so debugging while producing means a huge cost per car.
- deleted 9y ago[deleted]
- rconti 9y agoLikely it was his only option. Delaying shipping the car by 6 or 12 months (arbitrarily-chosen numbers) was simply a non-starter for, I'm sure, cashflow reasons. Even if this means it takes 2-3x as long to get up to full production rate, from an investor standpoint, this was likely a necessary evil.
- melling 9y agoTesla only shipped 260 Model 3’s in Q3. Now they’re approaching 1000 cars a week. http://h4labs.org/tesla-is-approaching-1000-model-3s-a-week/ http://h4labs.org/tesla-is-approaching-1000-model-3s-a-week/
- dhzjxnbzn 9y agoCars produced in the last seven days of the quarter is a somewhat gamable metric. They may or may not be sustaining production at that rate.
- SimbaOnSteroids 9y ago
- gozur88 9y agoI'm amazed the extent to which investors are willing to shrug off this kind of news when it comes to Tesla.
- vkuruthers 9y agoMusk has painted himself into a corner. He is probably aware that skipping the hard tool test phase was a bad idea, but had no choice, they would've run out of money adding another 6-12 months to the model 3 timeline. What they're probably seeing now is lots of model 3s coming off the production line with non trivial faults (as to be expected), and stock-piling those because they can't afford to stop the line and fix root causes. Fixing all those stockpiled 3s will take a hell of a lot of time and $$$. Fair chance Tesla will go into BK in the next 12 months or so if you ask me..
- Robotbeat 9y agoBankruptcy? Doubt it. They didn't go bankrupt in 2008 when they had not much more than a few prototypes (that overheated), some gliders, and an idea. Tesla has been here before and worse.
- dx034 9y agoThey had $21.9bn liabilities in Q3 2017, compared to $489m in 2011. Couldn't find 2008 numbers but sure that debt was much lower then. Bankruptcy doesn't just mean having low cash levels, it means not being able to serve debt in time. That risk has increased meaningfully with increases in debt. Missing the coupon on one of their bonds by just a few days would put them in technical default and could trigger bankruptcy.
- simonsarris 9y agoMaybe its just because I've been holding TSLA for years, but it all feels so short sighted when people panic and doom-say about stuff like this. People have totally forgotten how the Model X ramp up went (badly[1]). This is nothing by comparison. In a couple years people won't remember that predictions were off yet-again by 6 months. They'll be driving electric cars instead. [1] Mostly due to overly complex components like the doors, but still, the X ramp up was abysmal, and everyone has mostly forgotten about it. Consider that your foreshadowing. I'm certainly glad I didn't sell.
- ironchief 9y ago@Tweetermeyer TESLA TOTAL PRODUCTION BY QUARTER Q32016: 25,185 Q42016: 24,882 Q12017: 25,418 Q22017: 25,708 Q32017: 25,336 Q42017: 24,565 Anyone else noticing a pattern here? https://twitter.com/Tweetermeyer/status/948682235892264960 https://twitter.com/Tweetermeyer/status/948682235892264960