3Q18 Model 3 Production - Take 2

[adaptabl]

The question is what was done to hit the 5,000 mark. Can that level be sustained and be profitable? They seemed to be working their workers at level that can not continue. How do they move forward from there? At some point (very soon) they will have to make the $35,000.00 car that many of the reservation holders wanted. I think that will be the test. If they can reach that volume and be profitable on the $35,000.00 version the Shorts are in big trouble. If not the shorts will get big rewards.

 

[electracity]

At some point (very soon) they will have to make the $35,000.00 car that many of the reservation holders wanted.

Why?

Ideally they would make a batch of SR M3 this year, but it hardly seems to be a "have to" situation. Pumping out P AWD M3 makes their problems go away.

 

[adaptabl]

Why?

Ideally they would make a batch of SR M3 this year, but it hardly seems to be a "have to" situation. Pumping out P AWD M3 makes their problems go away.

Do they have enough demand for the premium versions that Tesla can make 250,000+ units a year and sell them all? I suspect that many on the reservation list are waiting for the lower cost version. There has to be some reason that ordering was opened up to all reservation holders.

 

[electracity]

Do they have enough demand for the premium versions that Tesla can make 250,000+ units a year and sell them all? I suspect that many on the reservation list are waiting for the lower cost version. There has to be some reason that ordering was opened up to all reservation holders.

The configurator says 6-9 months for new orders, and doesn't offer an SR version. So presumably they have filled this years production with $50K + orders.

I think its good enough to get some $35K cars sold in the U.S. with the half tax credit next year. This would still reward existing Tesla owners with a day 1 reservation who wanted an inexpensive second Tesla.

 

[dhanson865]

I would love to see the week by week forecast for those voting 75000 or more. That would presumably mean exiting September at upwards to 8000/week. That would put Fremont at a run rate of a half million total vehicles a year entering the fourth quarter.

I wasn't considering a shutdown week, 13 weeks * ~6,000 a week = ~78,000.

Though after reading your posts I think a shutdown week is a reasonable possibility and that puts it at 12 x ~6,000 = ~72,000. You've convinced me to drop it a notch back to the 70,000 choice.

Lets see a 13 week list

Week 1: 1000 (largely shut down 4. july)
Week 2: 4750
Week 3: 5000
Week 4: 5250
Week 5: 5500
Week 6: 5700
Week 7: 5900
Week 8: 6000
Week 9: 6000
Week 10: 6100
Week 11: 6200
Week 12: 6300
Week 13: 6400

That's just over 70,000 and it's likely optimistic unless there is no shutdown.

 

[mmd]

The poll is too biased It should start with:
30k or less.
30k-40k
40k-50k

 

[mrdoubleb]

So I am still wiping the egg off my face after having been the most optimistic on M3 Q2 production in Troy's poll. Having said that I would still caution everyone over thinking in terms of a linear production ramp.

I think as the alleviate bottlenecks in certain areas, production jumps to the level of the next bottleneck in another area. What makes this prediction game very difficult is predicting when these jumps occur. If it happens a week or two sooner or later, it makes a huge difference when we are talking about a 5k per week pace. This is why the "they produced 2,5k on average in Q2" narrative is dangerous. Sure, technically true, you can always do that math after the fact. But looking ahead, if that last jump happened say 2 weeks earlier, we are talking about a 20% difference in total quarterly production numbers.

Anyway... my thinking for Q3 is, that yes, this week had a lot of down time, but i don't think they will drop below 4k for the next 2 weeks and i expect them to be back at 5k in a more sustainable manner fro the last week of the month. August should be good for 5k avg/week and if they can jump to 6k, we could have 2-3 weeks of at or slightly above that number in September. Adding in 2 weeks of shutdown, I am in the 55k club for this quarter.

 

[Yggdrasill]

I'm thinking a ramp along these lines:

Week 1: 1500 (largely shut down 4. july)
Week 2: 3500
Week 3: 4000
Week 4: 4500
Week 5: 4500
Week 6: 5000
Week 7: 5000
Week 8: 5500
Week 9: 6000
Week 10: 6000
Week 11: 6000
Week 12: 6000
Week 13: 6500

64,000 total, minus an additional one week shutdown at some point, so minus ~5,000 cars, resulting in 59,000 Model 3s produced.

After thinking about it a bit more, I'm thinking something like this:

Week 1: 1500 (largely shut down 4. july)
Week 2: 3500
Week 3: 4000
Week 4: 4500
Week 5: 4500
Week 6: 500 (shutdown for upgrades required to reach 6000/wk)
Week 7: 3500
Week 8: 5500
Week 9: 6000
Week 10: 6000
Week 11: 6000
Week 12: 6000
Week 13: 6500

So 58.000 total. Down 1000 from before.

 

[Ellec]

I am basing my predictions on how Q2 went.

• Q1 last week burst rate was 2020.
• Q2 total Model 3 production was 28,578.
• 2 weeks downtime in Q2 so 11 weeks production

28,578 / 11 = 2598 per week.

This exceeds the last week burst rate of Q1 by 28.6%.

So

• Q2 last week burst rate was 5031
• Adding 28.6% onto that is 6470 per week average.
• Assume 11 weeks production

Total for Q3 is 6470 * 11

71,170 Model 3 cars for Q3. With an exit burst rate of 8k cars

 

[Ellec]

Do they have enough demand for the premium versions that Tesla can make 250,000+ units a year and sell them all? I suspect that many on the reservation list are waiting for the lower cost version. There has to be some reason that ordering was opened up to all reservation holders.

Reports they now have 650k reservations, latent demand coming up as they see them on the road and that production has ramped enough that the wait time is much shorter.

 

[vigleik]

I voted 50,000 or less. But not much less. I’m thinking 11 weeks at an average of 4,500, for a total of 49,500.

Deliveries should be about the same since the pipeline is now filled, and I’m hoping this will be enough to post a small profit.

 

[EinSV]

Reports they now have 650k reservations, latent demand coming up as they see them on the road and that production has ramped enough that the wait time is much shorter.

That rumor is clearly false. On Monday -- only four days ago -- Tesla reported 420,000 reservations. http://ir.tesla.com/static-files/fd92a81a-6130-4d10-9997-dbd0304e50d7

Let's stick with facts.

 

[GeorgeSymonds]

5000 in a week nearly killed them.

The average for the quarter was down around 2.2k a week.

Its a game of diminishing returns, you can't keep doubling and doubling again productivity improvements.

Assuming they don't build yet another tent, and given there's still a bit of a question mark over the paint shop capacity (even reducing the chemicals they need to get rid of doesn't mean they've magically doubled he capacity), I don't see the average for the quarter being any more than 3.8k a week on M3 - maybe 50k for the quarter and the usual steady MS and MX numbers.

As a point of reference, I was within about 1k on last quarters prediction so my slightly pessimistic interpretation of the news was close then, so I'll stick with that approach now

 

[MP3Mike]

I don't see the average for the quarter being any more than 3.8k a week on M3

But they are saying that GA3 will be at ~5,000/week on its own soon, and they hope to be to 6,000/week by the end of August. I would think that would put them over 3,800k/week average for the quarter.

 

[GeorgeSymonds]

But they are saying that GA3 will be at ~5,000/week on its own soon, and they hope to be to 6,000/week by the end of August. I would think that would put them over 3,800k/week average for the quarter.

Being frank, they say a lot of things. My advice is don't listen to what's being said, read between the lines and look at facts.

 

[SlicedBr3ad]

But they are saying that GA3 will be at ~5,000/week on its own soon, and they hope to be to 6,000/week by the end of August. I would think that would put them over 3,800k/week average for the quarter.

the problem here is that we dont know what they plan to do by end of september. if their max rate is 6k/week, i'd stick with my guestimate that average will be around 4k/week. if they plan to push to 7k or even 8k by september end, that 4k/week average will likely be around 5k/week and will make a big difference.

also, i see a lot of optimistic projections. good for you . my point is, regardless whether things will turn out optimistically or not, those who doubted tesla can do ~5k/week are about to eat a hat.

 

[GeorgeSymonds]

the problem here is that we dont know what they plan to do by end of september. if their max rate is 6k/week, i'd stick with my guestimate that average will be around 4k/week. if they plan to push to 7k or even 8k by september end, that 4k/week average will likely be around 5k/week and will make a big difference.

also, i see a lot of optimistic projections. good for you . my point is, regardless whether things will turn out optimistically or not, those who doubted tesla can do ~5k/week are about to eat a hat.

Did anyone really doubt they'd ever get there, or just doubt the timescales? One day Tesla will make 50k cars a week, if I was Musk and said it was going to be next week, the very loyal fans might argue he still delivered on the promise even if it took 15 years to get there. Thats not how predictions are meant to work

 

[SlicedBr3ad]

Did anyone really doubt they'd ever get there, or just doubt the timescales?

are you serious?! literally all eyes were on tesla in past 9 months, looking and doubting they can achieve 5k. after they achieved 5k, stock tanked 15% because market consensus is that they cannot sustain this and because their q2 deliveries did not keep up with production. q3 is where these things will turn around and i just can't wipe that stupid smile from my face because of this. i'm probably naive that tesla becoming profitable in q3 will change market story about tesla's but one can hope.

 

[bdy0627]

Q4 2017
Production: 2425
End Weekly Rate: 700
Weekly AVG (13 WKS): 187
Ramp Growth Rate: 933%

Q1 2018
9766
2000
751
403%

Q2 2018
28578
5000
2198
293%

Q3 2018???
60000
?
4615
227%

Based purely on the ramp progress to date, I think 60,000 should be a pretty close estimate, +/- 5,000. It's a bit low in terms of the pattern of the last weekly rate from the quarter before becoming roughly the average weekly rate of the next quarter, but it's pretty close. With the addition of the new GA4 line, it's probably reasonable to expect Tesla to be sustaining the exit rate of Q2 quicker than in the previous quarters. If so, that would push the production numbers up even higher.

50,000 appears too low an estimate based upon the ramp history. It also ignores the new assembly line addition. That would give an average of 3800 with a change rate of 175%. I think that's too large of a drop off in the ramp growth rate for this quarter.

However, it's probably wise to be a little skeptical that they will continue this rate of growth. I think a range of 55,000 to 65,000 is reasonable, with higher being optimistic, and lower pessimistic.

 

[Out4aDuck]

I enjoy reading the enthusiastic comments, but the reality is that Tesla is progressing on an S-shaped ramp-up to a sustained 5000. We have just passed through that inflection point of the curve, so it's not reasonable to expect that production will double over last quarter. There's still a lot of optimization yet to be done. I'm going with a 50% increase, which puts my estimate in the lowest bucket.

Sales on the other hand will easily be 125% higher.