This is ths sort of weird local detail which Tesla probably doesn't know. I wonder if there's some way to communicate this to the right people?
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From notable Silicon Valley venture capitalist:
That's why Tesla should have a link on their website (like superchargers) for where they should locate stores and service centers. Locals know best what they need, and the best deals...especially with planning for the model 3 capacity.
Just wanted to follow up on some post-reveal Model 3 thoughts. Prior to the reveal, I shared how I thought this was going to be a pivotal moment for Tesla. And I have to say, Tesla nailed it.
I was able to test ride in a Model 3, and it's simply a gorgeous car. I think it looks better than the Model S. And I think the Model 3 looks much better in person than in photos. Almost everyone I talked to at the reveal event was deeply impressed by how beautiful the Model 3 looked.
Further, the car drove very well (as far as I could tell being a rear middle passenger). The acceleration felt slightly slower than my P85. So, I'd say 4.6-4.8 seconds (0-60mph) but that was with 5 adults in the car. It appears that the test ride cars were AWD models, but it's unclear if they were performance models or not. Anyway, acceleration was impressive nonetheless. Handling was also impressive. As the driver did some slalom turns, it's clear that the Model 3 benefits from the low center of gravity the battery pack provides. The drive felt very similar to the Model S overall. And that's a very, very good thing.
The all-glass roof is simply stunning. It makes it feel like a super luxury car and something from the future.
The lack of a driver instrument panel was awkward, but I'm expecting Tesla to have something in the works (like a heads-up display). But the 15" horizontal screen was very, very nice.
I don't think there's going to be any car in its class that can compete with the Model 3 in terms of performance, looks, or technology. The Model 3 is Tesla's "moment". It's turning point. In fact, I think it's Tesla's defining moment even more so than the Model S debut. The Model 3 launches Tesla into a whole different trajectory of growth.
I think when we look back at Tesla several years from now, we will be able to clearly distinguish between pre-Model 3 Tesla and post-Model 3 Tesla. Post-Model 3 Tesla is all about the crazy demand the Model 3 is/will produce and Tesla chasing to build production capacity. However, currently we are in a state of limbo of sorts. The Model 3 has been revealed and reservations have exceeded almost everybody's expectations (ie., almost 400k so far). But there are still a lot of doubters... "sure Tesla has demand, but they're probably take forever to make the car." In other words, people are still viewing Tesla through the lens of pre-Model 3 Tesla.
Here's some more thoughts on this. With pre-Model 3 Tesla, Tesla has been struggling with demand as a high-growth company. Let me explain. I'm not saying that there isn't demand or it's not growing. What I am saying is that the demand for the Model S (for example) isn't growing like crazy (ie., 50% a year). As a result, Tesla's been walking a fine line. They've been matching their growth plans with the demand of Model S (and now Model X). They know it'll be very bad if they overshoot demand with over-production. So, Tesla's been careful. The official line from Tesla has always been "we're production-constrained." I believed that until late 2014 or so. But after that, I don't really believe it. I think they're more demand-constrained with the Model S (the Model X is a different story because it's just ramping now). So, pre-Model 3 Tesla didn't really have much to wow the markets/investors. That's why the stock price has been up/down over the past few years. The luxury/premium large sedan market just isn't big enough to get investors hyped up over Tesla. Tesla needs a bigger market.
With post-Model 3 Tesla, it's a completely different story. The market is much, much larger. And now Tesla can wow the markets/investors with off-the-charts demand that justify a future of very rapid growth. This is when things get fun.
Right now, we're in a sort of limbo... the Model 3 has been revealed but deliveries haven't started. And Tesla hasn't been clear and specific how they're going to meet the current demand. But sooner or later, Tesla will reveal production increase plans which will impact every part of Tesla and it's growth and eventually deliveries will start. So, we're going to enter post-Model 3 Tesla soon. And it could be sooner than when Model 3 deliveries start, if investors/market start believing Tesla can actually execute, ramp production, and make money off the Model 3. It's tough to say when we're going to really enter the "post-Model 3 Tesla", but I think when we do the stock price will reflect it. There's going to be a lot of people who try to guess when this transition takes place, but I think it could really happen anytime. It could happen within a month (ie., Elon shares specific production increase plans). Or it could take months after deliveries start. I don't know. All I know is that I think it's a good time to be a TSLA shareholder as we make this transition from a pre-Model 3 Tesla to a post-Model 3 Tesla.
The Model 3 is Tesla's defining moment, for sure. And so far it's going very well.
What could make them trust the company in the ability to ramp up production, before the start of Model 3 deliveries?
▢ ramp of Model X production
▢ ramp of battery pack/cells production at Gigafactory 1 pilot plant
▢ full build-out of the Gigafactory 1
▢ site selection for manufacturing plants in Europe and/or Asia
▢ site selection for additional Gigactories
▢ expansion of the supercharger network
▢ opening of new service centers
▢ opening of more stores
▢ cash raising
▢ strategic partnership
▢ all the above
▢ other: ______
If so, in what time frame?▢ ramp of battery pack/cells production at Gigafactory 1 pilot plant
▢ full build-out of the Gigafactory 1
▢ site selection for manufacturing plants in Europe and/or Asia
▢ site selection for additional Gigactories
▢ expansion of the supercharger network
▢ opening of new service centers
▢ opening of more stores
▢ cash raising
▢ strategic partnership
▢ all the above
▢ other: ______
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palmer_md
Member
Great post, and I fully agree. So I guess I'll be the first to guess. My hunch is that with the number of doubters there are out there regarding Tesla and their ability to deliver on time and maintain the budget/price, that the inflection point will be after deliveries begin. As a long term shareholder who is a firm believer in the master plan and the way they have approached the business thus far, I think they are on track to surprise these doubters. Gigafactory seems on track as well as the build-out of the service centers and showrooms along with the supercharger network. Things are looking good, but as noted, I think the stock won't reflect this until after deliveries begin to happen in quantity. Early 2018 I'm sure.
DaveT, thanks for sharing. I too think the production won't be a constraint, it was not for model S in 2015 and will not be an issue for model 3 as soon as enough demand + capital is available. TM already got enough demand, so market will welcome the capital raise if it can boost the model 3 production plan in terms of schedule and capacity.
btw, I don't think model X has production issue also. The slow production ramp up and poor reliability is mainly due to over engineering of the design instead of manufacturing and sourcing.
btw, I don't think model X has production issue also. The slow production ramp up and poor reliability is mainly due to over engineering of the design instead of manufacturing and sourcing.
"We are on track to achieve volume Model 3 production and deliveries in late 2017. Of course, in order to meet that timeframe, we will be holding both ourselves and our suppliers accountable to be ready for volume production in advance of that timing. Additionally, given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned. Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it." - Q1 2016 Shareholder Letter
Wow, Tesla's now aiming to build 500k cars in 2018. I didn't even think that was possible... to go from starting production in 2017 and then building probably 350k Model 3 the following year. That is one crazy steep growth trajectory.
More thoughts to follow.
Wow, Tesla's now aiming to build 500k cars in 2018. I didn't even think that was possible... to go from starting production in 2017 and then building probably 350k Model 3 the following year. That is one crazy steep growth trajectory.
More thoughts to follow.
JRP3
Hyperactive Member
Bears will focus on the capitol raise they "knew" was coming anyway, ignoring the fact that sometimes plans need to change quickly.
I'm not sure if people realize how many things need to be set in motion right now in order for them to build 500k cars in 2018.
First, Gigafactory needs to ramp battery production to meet that production target. And if Tesla is starting cell production in Q4 2016, then they need to ramp cell production like there's no tomorrow in order to meet their 2018 targets. One of the challenges is getting Panasonic to move forward their plans since Panasonic doesn't move as fast as Tesla so this could pose difficult. They also need to be thinking about Gigafactory #2, since they will be tapped out of battery production within 2+ years with current Gigafactory. Gigafactory #1 can be expanded some, but not enough to handle the apparently crazy Model 3 demand. So, I would imagine site selection for Gigafactory #2 should happen by year's end.
Second, Tesla needs to rapidly increase the number of service centers and superchargers. For service centers, I've been hearing of recent long wait times for service that's blamed on Model X seat recall. But with Model 3, Tesla will need to exponentially grow the number of service centers, and that will take a lot of money and people. They need to support 350k+ Model 3 owners in just a few years. The same goes with supercharging. I don't see how they can offer free supercharging with the Model 3. Perhaps they'll allow Model 3 owners to have free supercharging for long-distance travel (ie., outside of 60 miles of where you live), or else local superchargers would get just too crowded. But Tesla will need to ramp up supercharger rollout and, more importantly, they'll need to add more stalls to popular supercharging locations.
Third, Tesla needs to significantly increase their production capacity. They will need to order a ton of robots, tooling, etc. And they need to hire a ton of new workers as well. They are basically trying to max out the Fremont factory in 2-3 years time. All of this is going to take a lot more capital and a lot of hiring. Further, Tesla needs to be searching for another factory location to support growth into 2019 because with just the Fremont factory they could be production limited in 2019. So, in order for a new factory to come online in 2019 (or 2018), they need to be searching for the factory location this year and finalize site location by year end, IMO. It's also possible they would search for two factory locations or even three (ie., Asia, Europe, U.S.).
Fourth, in order to meet volume production goals by late 2017, Tesla needs to start finalizing designs and needs to start putting in ordered with tooling and suppliers since they need ample time for quality control and testing before production. I would expect the final version of the car to be ready by end of summer this year if they are serious about meeting volume production goals by late 2017. This means Tesla's engineering teams must be pulling off long days to finalize the final specs, design, and engineering on the Model 3. They'll need to do lots of testing and fast iterating, and they'll need to do this quick.
Fifth, Tesla needs money and they need it now. Some people assert that Tesla can wait a couple quarters before raising capital, but this is not the case. If Tesla is to meet their volume production goal of late 2017 and 350k Model 3s in 2018, then they need to ramp up the spending now. They need a significantly cushion as well, since all this new spending will cause Tesla to bleed cash for many, many quarters (more like years) to come. But this is an easy decision for Tesla as they see ridiculous demand for their car and they know that the demand will likely only increase if they can deliver the car they know they can. So, it's easy to forgo current profits and spend like crazy to grow right now. Profits will come years down the road. Now is the time to spend to make their new Model 3 production goals a reality.
I personally think, and I've said this before as well, that Tesla will raise capital this month. And I think that the capital raise will be good for the company and stock, since it will provide Tesla with the financial means to be able to reach their new production goals. The tricky part is how much to raise. It's possible that they raise the money in parts - part one now (with $2 billion) and part two early next year (with $2-3 billion). And they'll probably need to raise many more rounds after if demand for their cars, ie., Model 3, Model Y, continue to grow.
If demand continues to be high and growing, I think we're in a stage where Tesla could be raising money for many years to come as they plow all profits back into their company and growth and they need more money to fulfill more demand coming online. For me as a long-term investor in the company, I'm very excited about this and Tesla's growth prospects. For the bears and doubters, it just gives them reason to think that Tesla will never turn a profit. But they fail to realize that great fast-growing companies do reach a point, when they're more mature, when their growth tapers and they're able to return mega-profits to shareholders. But for now, I strongly think Tesla should take full advantage of the opportunity that lies before them.
First, Gigafactory needs to ramp battery production to meet that production target. And if Tesla is starting cell production in Q4 2016, then they need to ramp cell production like there's no tomorrow in order to meet their 2018 targets. One of the challenges is getting Panasonic to move forward their plans since Panasonic doesn't move as fast as Tesla so this could pose difficult. They also need to be thinking about Gigafactory #2, since they will be tapped out of battery production within 2+ years with current Gigafactory. Gigafactory #1 can be expanded some, but not enough to handle the apparently crazy Model 3 demand. So, I would imagine site selection for Gigafactory #2 should happen by year's end.
Second, Tesla needs to rapidly increase the number of service centers and superchargers. For service centers, I've been hearing of recent long wait times for service that's blamed on Model X seat recall. But with Model 3, Tesla will need to exponentially grow the number of service centers, and that will take a lot of money and people. They need to support 350k+ Model 3 owners in just a few years. The same goes with supercharging. I don't see how they can offer free supercharging with the Model 3. Perhaps they'll allow Model 3 owners to have free supercharging for long-distance travel (ie., outside of 60 miles of where you live), or else local superchargers would get just too crowded. But Tesla will need to ramp up supercharger rollout and, more importantly, they'll need to add more stalls to popular supercharging locations.
Third, Tesla needs to significantly increase their production capacity. They will need to order a ton of robots, tooling, etc. And they need to hire a ton of new workers as well. They are basically trying to max out the Fremont factory in 2-3 years time. All of this is going to take a lot more capital and a lot of hiring. Further, Tesla needs to be searching for another factory location to support growth into 2019 because with just the Fremont factory they could be production limited in 2019. So, in order for a new factory to come online in 2019 (or 2018), they need to be searching for the factory location this year and finalize site location by year end, IMO. It's also possible they would search for two factory locations or even three (ie., Asia, Europe, U.S.).
Fourth, in order to meet volume production goals by late 2017, Tesla needs to start finalizing designs and needs to start putting in ordered with tooling and suppliers since they need ample time for quality control and testing before production. I would expect the final version of the car to be ready by end of summer this year if they are serious about meeting volume production goals by late 2017. This means Tesla's engineering teams must be pulling off long days to finalize the final specs, design, and engineering on the Model 3. They'll need to do lots of testing and fast iterating, and they'll need to do this quick.
Fifth, Tesla needs money and they need it now. Some people assert that Tesla can wait a couple quarters before raising capital, but this is not the case. If Tesla is to meet their volume production goal of late 2017 and 350k Model 3s in 2018, then they need to ramp up the spending now. They need a significantly cushion as well, since all this new spending will cause Tesla to bleed cash for many, many quarters (more like years) to come. But this is an easy decision for Tesla as they see ridiculous demand for their car and they know that the demand will likely only increase if they can deliver the car they know they can. So, it's easy to forgo current profits and spend like crazy to grow right now. Profits will come years down the road. Now is the time to spend to make their new Model 3 production goals a reality.
I personally think, and I've said this before as well, that Tesla will raise capital this month. And I think that the capital raise will be good for the company and stock, since it will provide Tesla with the financial means to be able to reach their new production goals. The tricky part is how much to raise. It's possible that they raise the money in parts - part one now (with $2 billion) and part two early next year (with $2-3 billion). And they'll probably need to raise many more rounds after if demand for their cars, ie., Model 3, Model Y, continue to grow.
If demand continues to be high and growing, I think we're in a stage where Tesla could be raising money for many years to come as they plow all profits back into their company and growth and they need more money to fulfill more demand coming online. For me as a long-term investor in the company, I'm very excited about this and Tesla's growth prospects. For the bears and doubters, it just gives them reason to think that Tesla will never turn a profit. But they fail to realize that great fast-growing companies do reach a point, when they're more mature, when their growth tapers and they're able to return mega-profits to shareholders. But for now, I strongly think Tesla should take full advantage of the opportunity that lies before them.
FredTMC
Model S VIN #4925
Thank Dave. Great post
I agree on most points. Yes, cap raise is coming very soon
Service centers are easy (IMO). Just capital spend for leased buildings and mechanics
GF battery lines are fairly easy. Known. But Panasonic needs to step up or tesla can throw more money at it. Maybe both.
Model 3 better be truly easy to manufacture. I think TM learned many lessons from MX.
I agree on most points. Yes, cap raise is coming very soon
Service centers are easy (IMO). Just capital spend for leased buildings and mechanics
GF battery lines are fairly easy. Known. But Panasonic needs to step up or tesla can throw more money at it. Maybe both.
Model 3 better be truly easy to manufacture. I think TM learned many lessons from MX.
What expenditures need to be made in your view over the next few months that bring your thoughts to this conclusion?
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As for Service Centers, Tesla does need to make sure the amount of service work required drops dramatically. Ideally, the Service Center is basically like the advertised Maytag repairman.
Can we buy stock in Kuka? They seem to be private unfortunately.
Can we buy stock in Kuka? They seem to be private unfortunately.
Great analysis as always Dave, I appreciate it very much. One thing about ramping up service centers: I totally agree with you on that point and think they really need to increase the ramp to handle the vastly increased numbers of Model 3 cars that will be on the road when in full production. But from a contrarian perspective to our beliefs, perhaps management at Tesla thinks that since the Model 3 is slated to be a much simpler car to build, there may not be as much of a need for service between normal service intervals for the Model 3 to take care of issues? I could see how Elon might think that and forge ahead under that belief, with an undersized service and support network.
Yes, you can. Symbol is KUKAF. I bought in June 2014, at $57, after a factory tour when I heard about Tesla basically buying all of their production for the next year.
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