Published on December 6th, 2018 |
by Zachary Shahan
December 6th, 2018 by Zachary Shahan
Thousands or tens of thousands of Tesla Model 3 buyers got their cars sooner than originally expected. Tesla did achieve its original Model 3 production plan.
Misleading analysts and media coverage of Tesla continues. One of the most common incorrect or misleading storylines regarding Tesla is an odd one. Yes, for a period of time, the Tesla Model 3 production ramp was slower than Tesla had forecast in previous quarters — “production hell” was more hellish than CEO Elon Musk thought. There’s absolutely no disputing that.
However, any time someone says Tesla was late on its original Model 3 production plan, I cringe a bit. Tesla actually nailed its original plan for the Model 3, and that meant that tens of thousands of buyers got their Model 3s sooner than originally expected. I’ll come back to the original timeline in a moment, but we should go through the new comments first.
To be clear, the new comments come from a Tesla bull, Pierre Ferragu of New Street Research. New Street Research has a price target of $530 on Tesla. His statement this week (via Teslarati and Barron’s) was: “By shooting way too high, Tesla failed on its original plan, but achieved a world-class result. The next production sites will be much more efficient, and will ramp very rapidly.” Naturally, I agree with the point of view expressed at the end, but noting that Tesla didn’t achieve its original plan for the Model 3 is inaccurate nonetheless.
Luckily, I’ve dealt with this issue before, so I will primarily republish an article below that I originally published in March of this year. First, however, the short summary points are as follows: In 2013, Elon Musk forecasted that Model 3 production would start no later than 2017 (note that this was before the car was even named “Model 3”). Production of the Model 3 began in the middle of 2017 and slowly ramped up. In late November 2014, even the majority of surveyed CleanTechnica readers, who are typically quite bullish on Tesla, expected that Model 3 production would not begin in 2017. That implies that thousands or tens of thousands of Model 3 buyers got their cars sooner than initially expected. In August 2015, Tesla reiterated that first deliveries of the Model 3 were still expected in late 2017. It wasn’t really until Model 3 production began that Tesla’s forecasts started running into problems. Basically, ramping up production of the Model 3 was harder than expected, but hitting Tesla’s much earlier forecasts was not.
Also worth noting, the early 2014 plan for Gigafactory 1 was to reach battery production supporting 500,000 cars a year by 2020. Tesla seems to be on track for that. Elon Musk also noted in 2014 that he expected Tesla’s battery costs would get down to $100/kWh before a decade was up, and this year stated on two occasions that Tesla would reach that battery price by the end of this year. Again, it seems Tesla had no problem hitting its early targets and forecasts.
The remainder of this article — after a short pitch to become a CleanTechnica supporter — is the majority of that March 2018 article noted above. Enjoy.
I think it was April 2013 when we first got word that Tesla Model 3 production would probably start in 2017. Well, we didn’t have a name for the car yet, so we called it “Tesla’s fourth production model.” Tesla CEO Elon Musk was apparently hoping for a 2016 release, but quietly knew and told himself 2017 was more likely. His exact response to some questioning from Engadget on the matter: “Hopefully 2016, but I would say no later than 2017.”
In August 2013, we found out the name was probably going to be Tesla Model E. Tesla tried to trademark that name to have some fun with the spelling of its eventual vehicle lineup (S-E-X-Y). However, Ford had the trademark “Model E” and didn’t want to give it to Tesla, so Tesla later changed the name to Tesla Model ☰ (aka Tesla Model 3).
What’s interesting to me here is that the statement that the car would be in production by 2017 was accurate even though that was long before the car was even named Model 3.
Furthermore, for all the hype of the Model 3 being delayed, look, production actually began on the Model 3 within the timeframe Elon estimated way back in 2013.
I think the 2017 estimate was mentioned by Elon again in the following year, but I’m not finding any reference to that in our archives.
In late November 2014, I polled our readers about the 2017 production target for the Tesla Model 3. The target at that time didn’t include any forecast for the number of cars produced — just that production on the Model 3 would start by the end of 2017. The majority (62.5%) of our Tesla enthusiast/fanboy readership responded that they didn’t think the Model 3 would arrive in 2017. (In case you missed it, the Model 3 did arrive in 2017.)
By the way, in October or early November 2014, Jerome Guillen (then Tesla’s “Chief Designer,” now President, Automotive) stated that Tesla was aiming to produce 500,000 cars/year by 2020. Presumably, if people thought the Model 3 wouldn’t arrive on time, they also thought the 500,000 cars/year by 2020 goal was unrealistic. But Tesla later moved up the 500,000-by-2020 goal to a goal of 500,000/year by 2018 (in response to massive consumer demand for the Model 3). Even though this stretch goal proved impossible, the 500,000 cars/year by 2020 goal still seems like a good possibility.
As a side note: We heard rumor in June 2015 that the Model 3 would actually have a range of 250 miles per charge, not simply the promised 200 miles. That was a big rumor, and we weren’t sure whether to get excited or be skeptical. As it turns out, the base Model 3’s EPA-rated range is 220 miles* and the long-range Model 3 has 310 miles of range according to the EPA. (*The real-world range is said to be notably higher.)
In August 2015, these were some of my notes from a Tesla quarterly shareholder report:
- The Model 3 design will be revealed in the first quarter of 2016. (Woohoo!)
- First deliveries are still expected in late 2017.
- Basically, the 3 is still on schedule, but there’s not much more to say at this point.
- Tesla thinks it is still on track for 500,000 cars a year by 2020, and that it might even go beyond that. 500,000 is based on Fremont factory production capacity, but Tesla may localize production in some places in 3–5 years. (I’m guessing Australia and China are under consideration.)
Again, first deliveries did occur in 2017. Actually, first deliveries came in the middle of 2017, not the end of 2017. However, it’s true that first deliveries to non-staff customers came in late 2017.
I would also note here that Elon never claimed mass production would begin right off the bat. Anyone familiar with ramping up production of a new vehicle would know that’s not how it would happen. Taking that into account, start of production in the middle of 2017 and slowly ramping that up (with hiccups) through the end of 2017 and beginning of 2018 was actually ahead of the schedule we presumed back in 2015.
And, again, if you look at our 2014 poll, even bullish Tesla fans largely didn’t expect Tesla to get the Model 3 into production in 2017. (Context, Watson, context.)
I’ve got another “by the way” note for you. In late 2015, Elon stated: “And with the (Tesla) Model 3 and various iterations on that platform, I’m really confident that we can do, you know, another 300,000 or 400,000 cars per year.” That implies that Elon thought annual demand and production of the Model 3 and Model Y would total 300,000–400,000 units per year (combined).
The most recent comments from Mr. Musk on this topic (which, admittedly, aren’t super recent) are that he now expects demand for the Model 3 and Model Y to be approximately 500,000–1,000,000 units a year each — which implies 1-2 million units a year combined.
In other words, Elon’s 2015 timeline for the Model 3 turned out to be essentially accurate but he was drastically underestimating demand compared to today’s expectations. (Sound familiar?)
When did the mid-2017 start of production target first come into play? On May 4, 2016, Elon hesitantly shared the accelerated target. You could tell before he said it that he didn’t really want to share the dates, but my guess is he figured the word would get out anyway (or he was just trying too hard to explain how the tofu is made). He unveiled that the official Tesla target for start of production was July 1, 2017. But he emphasized that the target was for suppliers just to try to get them to deliver in a reasonable timeframe. The realistic target for actual beginning of production remained late in 2017.
Here was my final summary sentence on this back then: “So, taking into account the near-fact that some suppliers will be late and there could be tooling/ramp problems, Tesla expects to have the Tesla Model 3 in serious production by the end of 2017 … but the closer to July 2017, the better.”
As it turned out, in the beginning of 2017, everything seemed to actually be on schedule for start of production in July 2017. It was shocking. Most people didn’t believe it. Hardcore critics still claimed Model 3 production wouldn’t start until 2019 or 2020 or something like that.
No, volume production didn’t start in the summer or ’17, but production of the Model 3 did indeed start then. By that time, of course, many skeptics, “very serious analysts,” and naysayers dropped their claims of Tesla being unable to produce the Model 3. They stopped stating with 100% certainty that it would be years before the Model 3 went into production, if it ever did. They dropped their claims that there was no way Tesla would hit its targeted “end of 2017” start of production. Nope, the goal posts had moved.
And in the second half of 2017, it finally happened. Tesla finally fell behind on some of its stated production targets for the Model 3. Bottlenecks with battery production in particular — which Elon Musk recently admitted was ironic and presumably due to misplaced complacency — slowed down Tesla’s Model 3 production ramp. Perhaps other bottlenecks are at play as well, but we haven’t really heard of anything else. Anyhow, with even one critical machine down and one piece of the car coming out slower than planned, Tesla has missed a few Model 3 production forecasts in recent quarters. It’s not fun. It’s yet another sign that Tesla and Elon do not defy the laws of this universe and are indeed fallible. But it’s also a bit extreme, short-sighted, and disingenuous to act like Tesla is always late, only late, and needs to find a working watch.
In fact, the bottlenecks in the second half 2017 didn’t stop Tesla from reaching Model 3 production in 2017, as it has targeted since 2013 or earlier. The bottlenecks have slowed down the production increases Tesla was aiming to achieve, but they’ve more or less left Tesla where it was expecting to be when it was forecasting the story back in 2013, 2014, 2015, and 2016.
Elon gets slammed quite frequently for being overly optimistic with timelines. If you look at what he said back in 2013 about Model 3 production beginning no later than 2017, the man was accurate. His estimate was on the mark. His timeline (not quite his hopes, but his committed timeline) was right on the mark.
Who trusted his timeline? Who expected he would actually get the Model 3 into production in 2017? Not many people. And certainly not the people who said Tesla would crash and burn in 2013, in 2014, in 2015, in 2016, and yet again in 2017.
When considering who is more accurate with timelines, then, perhaps it’s time to give Elon a little more props and a little less sass.
Related: Tesla sales reports
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