I like your estimates, but for Model E I would make it much higher the year they go on the road (ie. 2017) and the year after that. Perhaps 500k and then 2mm and 5mm for 2019
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I like your estimates, but for Model E I would make it much higher the year they go on the road (ie. 2017) and the year after that. Perhaps 500k and then 2mm and 5mm for 2019
Wow, compared to your estimates of the Tesla Model E in 2017/2018/2019, my estimates look very conservative.
Yes, I believe that by 2016 and 2017 Tesla Motors cars will be even much more well known to the masses then they are today. I believe in the first day they start accepting Model E reservations there may be tens of thousands who sign up...and in the first 2-3 months when real ones are on the road and reviewed by CR and the likes there will be hundreds of thousands of reservations pouring in and it will take off from there as long as the wait time is not more than a year...TSLA may need to do another capital raise to build more Giga factories and building facilities right away for the massive demand.
This is actually a point that scares me as an investor. The Model E will be a home-run and I'm certain of it, but how do you prepare for something like that? One Gigafactory will definitely not be enough, but you can't justify building 3 of them right now. Same with factories... Freemont is not even close to being big enough for E production, so we will need many more. Both things are capital-intensive and cannot pop up over night.
The problem will result when Tesla experiences reservation rates on an exponential scale. When reservation rates jump into the millions what will Tesla do about battery production? Building another plant will take a ton of time and that will piss off wall street and reservation holders.
Maybe someone can help shed light on how this might play out?
That is a very good question, which requires a good degree of discussion.
But before we get to that, I would like to put forward another related question:
"What amount in US dollars will be required as a deposit for a reservation of a Tesla Model E by a US citizen?
I think that the required amount for a reservation of a Signature Tesla Model E by a US citizen will be $10,000 (for the first 1,000 Tesla Model E built vehicles).
And I think that the required amount for a reservation of a regular production Tesla Model E by a US citizen will be $2,000.
Do these two amounts sound acceptable to you?"
The current model is using an 8x multiplier between standard reservations and signature reservations, so if you have $2k as the standard reservation $15k (rounded from 16) would seem logical. But I even think they could go higher because the demand will be there, so maybe $2.5k and $20k?
OK
But I thought that the amounts of $10,000 and $2,000 would maybe be a bit too high. But that doesn't seem to be the case. So, although you could be right that they could go higher because the demand will be there, I still think that it would be better to take a bit of a conservative approach to determine these amounts, so therefore let's just stick to $10,000 and $2,000 as the deposit amounts.
As the annual global reservation numbers start to rise sharply to the millions, the total amount of deposits will be in the billions!!! And with all this money they can make lots of investments. So, money should not be a big problem.
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And now I would like to say something about what you have asked.
They know where they want to go, and they know that that is the only right thing to do, and they know that it is inevitable and that it will happen soon. All they have to be carefull about is that they indeed do deliver the best quality. Therefore, I think that they will be announcing a big investment program once in every two years, or maybe even once every year, just like they are going to announce the Gigafactory next week. Meaning that they will make big steps (almost) every year.
I know this doesn't fully answer your question, but maybe someone else can say more about it.
Following your reservation estimates, there won't actually be billions in cash available before the rollout of the model E. The problem I see is that reservations will exponentially increase after the car starts selling and people see how amazing it is. There may be maximum 500k people willing to put a preorder payment on a car that isn't out yet. But that $1 billion will be far too late to invest in battery infrastructure... Those investments need to happen now, but how can they justify building multiple gigafactories right now? They cannot, so that's the conundrum we will face. The car will come out, be a hit, and then all the sudden there will be a million person reservation list. Tesla will be stuck because they cannot ramp up fast enough as it would require whole new battery factories to supply the battery demand. Wall street and consumers will then punish TSLA (at least in the short term) in that scenario. Long term, this won't really be an issue, but I know a lot of people here trade on a shorter term horizon.
I think there could be a few scenarios to avoid this dilemma. One way would be to have another secondary offering next year to fund building a second Gigafactory. The second Gigafactory would be able to come online just as the first model e's were hitting the streets thus allowing a path to supply huge demand of an exponential reservation rate. Strong Model S and X demand in 2014 and 15 would strengthen the case for this. Potential problems I see... It might be hard to convince investors and shareholders that such an investment is necessary; a model E prototype might help solve this however. Again, just to reiterate, the key will be to have a plan in place prior to even starting a reservation list. It's bad form for a maturing company to have a multi-year wait time for a product. It was acceptable for the S, but it wont be for the E.
A second potential solution would be to control the reservation list by using basic economic principles. They could make reservation down payments expensive and only release the top end Signature and performance versions for the first few years. Model E reservation payments combined with S and X profits could then enable them to build out infrastructure needed. I would imagine a second Gigafactory could come online faster so this would fit the timeline to roll out the base model $35k model E (2020+?). At this point they could lower the reservation deposit and be ready to cope with a huge numbers. The benefits to this approach would be avoiding another secondary. The drawbacks could be criticism from pundits about not actually producing an affordable model E.
Maybe I am totally over analyzing. And I'm not actually too concerned because I'm sure Elon had a solution to this ages ago.
There is actually one more big announcement that I expect that we will be hearing about in the second half of 2016. That will be the announcement of the newly develloped battery cell (to replace the 18650 battery cells) that will be used in the battery packs for all the Tesla EV's and will be mass produced as from Q1 2017. And I think that this will also help to solve the issue that you are talking about.
What to do when annual global reservations for S/X/E are much higher than expected?
What to do when annual global reservations for S/X/E are much higher than expected?
The demand for Tesla EV's result in actual reservations and deposits.
And the production capacity results in actual deliveries of Tesla EV's.
A situation in which it appears that the pace in which the reservations/deposits keep coming in rises dramatically (which would be nice actually) to a much higher level than that Tesla Motors is capable of producing it's EV's, could cause some problems for Tesla Motors.
Just to keep it simple, just imagine that the number of new reservations for the Tesla Model S (made in 2014) surprisingly appears to be 60,000!!!
No way that Tesla Motors is currently capable of producing that many Tesla Model Ses in 2014.
And suppose that in every subsequent year the demand appears to be surprisingly much higher than was estimated at the beginning of each year.
For example:
2014
S = 60,000
X = 40,000
E = -
2015
S = 80,000
X = 60,000
E = 100,000
2016
S = 120,000
X = 100,000
E = 200,000
2017
S = 140,000
X = 140,000
E = 400,000
2018
S = 160,000
X = 160,000
E = 800,000
2019
S = 200,000
X = 200,000
E = 1,600,000
What should Tesla Motors do in such a situation (in your opinion)?
What to do when annual global reservations for S/X/E are much higher than expected?
The demand for Tesla EV's result in actual reservations and deposits.
And the production capacity results in actual deliveries of Tesla EV's.
A situation in which it appears that the pace in which the reservations/deposits keep coming in rises dramatically (which would be nice actually) to a much higher level than that Tesla Motors is capable of producing it's EV's, could cause some problems for Tesla Motors.
Just to keep it simple, just imagine that the number of new reservations for the Tesla Model S (made in 2014) surprisingly appears to be 60,000!!!
No way that Tesla Motors is currently capable of producing that many Tesla Model Ses in 2014.
And suppose that in every subsequent year the demand appears to be surprisingly much higher than was estimated at the beginning of each year.
For example:
2014
S = 60,000
X = 40,000
E = -
2015
S = 80,000
X = 60,000
E = 100,000
2016
S = 120,000
X = 100,000
E = 200,000
2017
S = 140,000
X = 140,000
E = 400,000
2018
S = 160,000
X = 160,000
E = 800,000
2019
S = 200,000
X = 200,000
E = 1,600,000
What should Tesla Motors do in such a situation (in your opinion)?
Leveraging their current facility, and running non-stop, and doing 'speed up' improvements on their current lines, and possibly outsourcing some bottleneck parts, they could probably reach ~60-80k production (assuming battery attainability).
Beyond that they would document increasing demand at current pricing levels. They would most likely raise pricing, to calm demand. They would approach a bank/partner (or offer more stock) with such data, and finance new production facilities.
Increase production capacity to match projected demand, at new lower expected production cost.
Total time ~4-7 years, including new battery production. As that is the stated reason for increased production of their vehicles.
Beyond that they would document increasing demand at current pricing levels. They would most likely raise pricing, to calm demand. They would approach a bank/partner (or offer more stock) with such data, and finance new production facilities.
Increase production capacity to match projected demand, at new lower expected production cost.
Total time ~4-7 years, including new battery production. As that is the stated reason for increased production of their vehicles.
funny, I've been thinking about the same scenario, but mostly in terms of advantages since Tesla more or less implied it will take until 2020 to ramp up to 500,000 vehicles per year (which is probably about the fastest they can without sacrificing quality).
if there is massive pent up demand for Gen III, we may see something like a million reservations very quickly.
this will,
+ be a real boon for residual value of the leased Model S and X vehicles (they become far more attractive with so many reservations, so few Gen IIIs produced)
+ possibly be a great source of funding. that is, "you're $2,000 deposit for your Model E is helping to fund our efforts to accelerate expanding production capability." 1 million $2,000 Gen III reservations would bring in $2 billion. Perhaps 2 million $1,000 deposits would be more realistic, but same $2 billion. personally, I'd volunteer to up my deposit to $2,000 to contribute to getting my car faster.
if there is massive pent up demand for Gen III, we may see something like a million reservations very quickly.
this will,
+ be a real boon for residual value of the leased Model S and X vehicles (they become far more attractive with so many reservations, so few Gen IIIs produced)
+ possibly be a great source of funding. that is, "you're $2,000 deposit for your Model E is helping to fund our efforts to accelerate expanding production capability." 1 million $2,000 Gen III reservations would bring in $2 billion. Perhaps 2 million $1,000 deposits would be more realistic, but same $2 billion. personally, I'd volunteer to up my deposit to $2,000 to contribute to getting my car faster.
I hope they ask for the same 2500 deposit. Less doesn't make sense. People could be waiting well over a year or even two years for their car depending on reservation volume. That's a huge wait!
The production limits they will face make me feel good about my decision to buy a model S now. Not waiting.
Supply will limit demand to some extent. If you go into a tesla store and they tell you its a 3 year wait for your car, you are likely to shop somewhere else in the meantime, especially if you have a pressing need for a car. Its not like a car is a commodity you can defer use on indefinitely.
Still, it would be a nice problem for tesla to have.
Still, it would be a nice problem for tesla to have.
Add a third production line to the Tesla factory in Fremont in late 2016 in order to increase the total production capacity of the Tesla Model S and the Tesla Model X. And manage the production of the Tesla Model E separately at different locations of new Tesla factories in the US, Europe and China.
2014 forecast is about 35k (from 2014 Q3 results webcast)
2015 I think 60k MS+MX
2016 perhaps 100k MS+MX
2017 150k-200k MS+MX (Giga factory production might start trickling in, there's the big if there's market for 200k/yr worldwide sales)
2018 I am a bit doubtful model E beings production
Is there any indication the Tesla Li Ion supply problem will go away before the Giga Factory comes online ? If true than even those fairly conservative numbers might not be achievable.
2015 I think 60k MS+MX
2016 perhaps 100k MS+MX
2017 150k-200k MS+MX (Giga factory production might start trickling in, there's the big if there's market for 200k/yr worldwide sales)
2018 I am a bit doubtful model E beings production
Is there any indication the Tesla Li Ion supply problem will go away before the Giga Factory comes online ? If true than even those fairly conservative numbers might not be achievable.
EVNow
Well-Known Member
Fun to see these 5 year old estimates. The below comes closest I think - rest were wildly more optimistic.
Close on E (3) - but widely off on S+X.
Close on E (3) - but widely off on S+X.
The totals here are quite good.
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