green1
Active Member
They've come close do doubling production every year so far, I certainly wouldn't bet against them doing it again.
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Benz
Active Member
Neither would I.
That's why I think that they will make some announcements (in May/June 2016?) regarding to new investments in order to increase their weekly production capacity at the Fremont plant.
I think that their weekly maximum production capacity will increase from 2,000 to 4,000 vehicles (S+X) as from Q1 2017.
jhm
Well-Known Member
I would point out that doubling auto sales annually while growing revenue 50% annually is consistent with an ASP that declines 25% each year. Since the Model 3 will be offered at half the price range as Models S and X, it is very important to model a declining ASP. For very simple math, consider the following.
Now I actually think this ASP curve is a bit too steep. It seems to imply the introduction of a vehicle at a lower price than the Model 3 by the end of the decade. I really do not think that Tesla will need to be that aggressive driving down prices. So a slight more gentle ASP curve yeilds a revenue trajectory that grows at 60% annually.
So I think is an aspirational trajectory. If Tesla tries to get close to 100% annual growth in unit sales and ASP falls by less than 20% per year, then revenue growth can exceed.50%.
Certainly in the long run ASP must progressively fall so that the addressable market expands. This is achieved by a combination of falling manufacturing costs for a given model and introduction of lower priced models.
| Year | Units k | ASP $k | Revenue $B |
| 2016 | 100 | $100 | $10 |
| 2017 | 200 | $75 | $15 |
| 2018 | 400 | $56.25 | $22.5 |
| 2019 | 800 | $42.19 | $33.75 |
| 2020 | 1600 | $31.64 | $50.63 |
Now I actually think this ASP curve is a bit too steep. It seems to imply the introduction of a vehicle at a lower price than the Model 3 by the end of the decade. I really do not think that Tesla will need to be that aggressive driving down prices. So a slight more gentle ASP curve yeilds a revenue trajectory that grows at 60% annually.
| Year | Units k | ASP $k | Revenue $B |
| 2016 | 100 | $100 | $10 |
| 2017 | 200 | $80 | $16 |
| 2018 | 400 | $64 | $25.6 |
| 2019 | 800 | $51.2 | $41 |
| 2020 | 1600 | $41 | $65.5 |
So I think is an aspirational trajectory. If Tesla tries to get close to 100% annual growth in unit sales and ASP falls by less than 20% per year, then revenue growth can exceed.50%.
Certainly in the long run ASP must progressively fall so that the addressable market expands. This is achieved by a combination of falling manufacturing costs for a given model and introduction of lower priced models.
green1
Active Member
I'm not sure I agree, because to my knowledge, in the past 3 years that the MS has been on sale, they have nearly doubled sales annually, and the ASP has not, to my knowledge, decreased by anything near 25% a year. In fact I think they said it's actually been increasing.
Sure Model 3 messes with that a bit, but it certainly won't be math as simple as you lay out. Your 2017 number, where no model 3s will be sold (ok, maybe a handful of founders cars on dec 31 to meet claims, but irrelevant to this discussion) is way bellow the ASP of either the S or X, so where's the money going? Your 2020 value, even in your revised chart is almost guaranteed to be below the ASP for the Model 3 (remember, the starting price is $35K, there's no way the average will be $41k for Model 3 alone, let alone when you average in S and X)
Sorry, your numbers just don't make sense.
jhm
Well-Known Member
My statement is simply a mathematical fact. If you increase unit sales by 100% and decrease ASP by 25%, then revenue increases by 50%. I.e.,
2 × 0.75 = 1.5
So the first table just works out that progression. The second table works out
2 × 0.80 = 1.6
I addressed the concern in your second paragraph is in my post. Tesla will continue to introduce new versions and models to move down market.
I think the average car sold globally is priced around $20k. So as Tesla moves progressively into the broadmarket we should see its ASP move toward $20k. (The exception to this is the move to autonomous cars not for private ownership.) Note also as the cost of batteries fall towarx $100/kWh, it become cheaper to make an EV than an ICEV of comparable power. So long term EVs can take prices lower conventional cars. If Tesla want to drive it's ASP down to $20k in ten years. If would need to reduce its ASP just 15% per year. Doubling unit sales annually while reducing the ASP 15% annually is consistent with 70% revenue growth, 2 × 0.85 = 1.7. This would be truly phenomenal growth leading to 51M unit sales and $1.2 T revenue in 2025. This would be about half the auto market. I am not seriously such a trajectory, but it is good to test some consistency of assumptions. Specifically, if any entity were to have 50% market share it's ASP would have to be pretty close to the ASP for the whole market. Any path to extraordinary marketshare requires a compelling and competitively priced product for nearly all segments.
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green1
Active Member
I'm not questioning your math, I'm questioning your assumptions. We have seen no indication that Tesla plans to pursue a course even half as aggressive as your more conservative guess. I see no reason to expect this in this time frame. Keep in mind that Tesla can produce 10 times what they plan to produce in 2020 and still not have anywhere near a majority of the market. their 2020 goals are still to produce only a tiny fraction of the annual worldwide auto sales.
Will their ASP eventually shrink, sure, but not at the rates you show in the time frame you show, not by a long shot. meanwhile I believe that the production ramp up will happen at close to those rates.
ASP for MS in 2012 was 96k in 2013 was 102k and for 2014 was 107k (I'm having trouble finding numbers for 2015) The MX is supposed to be ASP $5k higher than MS so we can probably expect 2016 ASP to be up around 110k (up substantially from the 75-80k you predict)
And 2017 will likely be similar. 2018 we'll start to see Model 3 and it's harder to guess, but with a starting price of $35k, I can't imagine an average price below $45k, and first year I can't expect Tesla to manage more than a 50% mix of Model 3 to S/X. So based on that I'd put 2018 in the range of 78k vs your 56-64k. 2019 and 2020 will probably see increasing sales of Model 3 vs S/X, so possibly bottoming out around a 60k ASP, all assuming zero price increases.
Sure, after that it could continue to fall, but keep in mind that today the ASP of all new cars is 33.5k so I certainly wouldn't predict dropping below that number way out in the future.
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Doubling the volume every year is not realistic. Do you really think it is? If so, what do you base that on? To me, it seems you use those numbers because they are mathematically beautiful, not because it is what is likely to happen. I think a more modest unit growth in the 40%-50% range and higher ASP is much more likely to happen up to 2020.
green1
Active Member
Doubling volume is based on Tesla's stated targets and their past performance. If you disagree with that assessment please provide the basis for your disagreement. Full disclosure, I don't expect them to actually double each year, but I do expect them to come close. (they tend to miss that target by a hair)
As for the ASP numbers, I agree the ones posted by jhm are based on "mathematically beautiful" and not on "what is likely to happen"
Simple, they said it themselves their goal for 2020 is 500k cars. And the recent quote from Elon Musk was they were so far doubling every year and probably will too this year. This absolutely doesn't mean they will keep doubling until 2020.
Personally, I think a more realistic but still quite optimistic curve would be
Year Production ASP Revenue
2016 85k 100k 8.5b
2017 120k 105k 12.6b
2018 200k 80k 16b
2019 330k 70k 23b
2020 500k 60k 30b
If we add in the revenue from Tesla Energy the revenue will have an additional probably 1b in 2016 and 50% growth for several years. Thus making the company as a whole still growing at a pace about 50% every year till 2020.
Main assumption here is the gigafactory goes with the plan without any hipcups. AND there are no additional gigafactories built and able to produce batteries before 2020. If the later happens, the numbers in 2019 and 2020 would probably go quite higher.
Personally, I think a more realistic but still quite optimistic curve would be
Year Production ASP Revenue
2016 85k 100k 8.5b
2017 120k 105k 12.6b
2018 200k 80k 16b
2019 330k 70k 23b
2020 500k 60k 30b
If we add in the revenue from Tesla Energy the revenue will have an additional probably 1b in 2016 and 50% growth for several years. Thus making the company as a whole still growing at a pace about 50% every year till 2020.
Main assumption here is the gigafactory goes with the plan without any hipcups. AND there are no additional gigafactories built and able to produce batteries before 2020. If the later happens, the numbers in 2019 and 2020 would probably go quite higher.
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jhm
Well-Known Member
You guys are totally missing my point. I was simply discussing a mathematical relationship between unit growth, ASP, and revenue growth. I am actually not predicting anything. Musk is on record as projectiing 50% revenue growth through 2025. And now he is talking about doubling unit sales at least for a little while. So the basic question I am trying to answer is whether Musk is inconsistent with himself. My answer is, no. It is mathematically consistent to double unit sales while growing revenue at 50%. Conversely, the idea that Tesla can grow unit sales and revenue at 50% while introducing the Model 3 is mathematically inconsistent. And yet many Tesla investors tend to use unit growth and revenue growth interchangeably. This is sloppy thinking. I believe that revenue growth is Musk's primary metric for growing the busines. So the only way to introduce the Model 3 and hit to revenue growth is to grow unit sales at a substantially higher rate.
Anyone who wants to propose that Tesla will only sell 500k vehicles in 2020 needs to show how this is consistent with 50% revenue growth, or at least explain why Tesla would want to grow revenue at a slower rate. I for one do not believe that Musk only wants to sell 500k in 2020. That number is connected to the capacity of the Gigafactory which Tesla is building out on an extremely fast pace.
One more thing, BYD aims to double unit sales for the next three years. Perhaps Musk is aware of this and now expressing similar ambition in public.
Worlds biggest EV and storage maker predicts annual doubling in market : Renew Economy
Anyone who wants to propose that Tesla will only sell 500k vehicles in 2020 needs to show how this is consistent with 50% revenue growth, or at least explain why Tesla would want to grow revenue at a slower rate. I for one do not believe that Musk only wants to sell 500k in 2020. That number is connected to the capacity of the Gigafactory which Tesla is building out on an extremely fast pace.
One more thing, BYD aims to double unit sales for the next three years. Perhaps Musk is aware of this and now expressing similar ambition in public.
Worlds biggest EV and storage maker predicts annual doubling in market : Renew Economy
I could go look up the numbers but I'm at work and sneaking this in.
They haven't doubled every year. The approximate numbers are:
2012: 2,500
2013: 22,000+
2014: 33,000+
2015: 50,000+
More like 50% from 2013 on. That would get us above about 76,000 this year. I'd be thrilled if they doubled, but not likely. Elon said before 2,000/week was max output, average would be 1,600-1,800 per week. So I'll be looking for guidance at the low end of 80K-90K. High enough that people see the real progress, low enough that a win is a win when they exceed it.
RationalOptimist
Member
When modeling out to 2020, there's likely to be another huge revenue source, in addition to S, X, 3 and energy: autonomous fleet. Elon thinks that within 2 years a car can drive autonomously across America without a human even stepping inside. If we correct for Elon-optimism, make that 4 years. Oh, that's 2020. if they have that technology do you think they will only use it will in the current models? I think not. I suspect the major platform following 3 will be the Tesla-taxi... designed not for driving performance but autonomy, safety, fleet economics. There will be no pedals, no steering wheel. Just room for 4-5 people to sit facing each other and be driven wherever the Tesla-uber-killer app on their phone takes them. In 2019 these will only roll out in California. But they'll take the world by storm. 2020 expect explosive growth as Tesla fleets come to every city. (The competitive battle w Apple Google Uber and Lyft is going to be a joy to behold, but my money's on Tesla playing a huge role).
OK, maybe you're struggling to see this by 2020, even though the logic of Elon's "summons" comment justifies it. So add a year or two. And while you're at it, don't forget the truck. So, you can take Fallenone's plausible numbers for S, X, 3, and very quickly model a company with revenue surging through $50bn and, by then, clearly en route to $200bn.
OK, maybe you're struggling to see this by 2020, even though the logic of Elon's "summons" comment justifies it. So add a year or two. And while you're at it, don't forget the truck. So, you can take Fallenone's plausible numbers for S, X, 3, and very quickly model a company with revenue surging through $50bn and, by then, clearly en route to $200bn.
Elon doesn't want Tesla only sell 500k in 2020, I don't either. But 500k is only what one gigafactory can support. To go beyond 500k, there must be additional gigafactories built and running before 2020. So far, there's nothing indicating this, expect the wish of selling more than 500k.
My understanding is that NUMMI press capacity is a limiting factor, it is 500k/year. If Tesla wants to produce more cars than that, they need one more press.
Once new (or refurbished) press is in place somewhere in the world, they need to build the assembly plant around it. Perhaps someone will exit the business and sell assets to Tesla.
My expectations are aligned with yours, or slightly lower. If Tesla continues 50% growth yoy, that is stellar performance, considering unfavourable macroeconomic developments.
We have a small macro-economic shock unfolding. China is in a seemingly uncontrolled slowdown dragging many emerging economies down. Rising USD is hampering sales outside of US. If that were not the case, we would be in high rather than low $200, based on Tesla's team great performance.
green1
Active Member
Tesla has already stated they want to build cars in both Europe and China, so that is quite likely.
stopcrazypp
Well-Known Member
Keep in mind there are two metrics: 35GWh in cells and 50GWh in EV packs. Elon has recently said the expansion in the factory was related to the demand in powerwall/powerpacks. So I would not take an expansion to mean a growth in EV pack capacity. Tesla has not guided that any expansion those metrics.
jesselivenomore
Member
Elon was not talking about year over year growth, he was talking about doubling fleet size.
2012: 2,500
2013: 24,500
2014: 57,500
2015: 107,500
They have guided for 1600-1800/week for 2016, so over 80k, approximately doubling fleet size once again.
That 500k/year number comes from times when Toyota and GM were at production.
The press that tesla is using now came from elsewhere:
Running 24/7/365 that tops at 5.256.000 stamped parts per year.
If one car needs 10 stamped parts, that is 525k production limit.
If a car only needs 8 stamped parts, that is 650k cars/year.
Benz
Active Member
First of all, let's get the numbers right:
Tesla Model S annual totals:
2012: 2,650
2013: 22,477
2014: 31,655
2015: 50,366 (This annual total is not 100% accurate)
Tesla Model S cumulative annual totals:
2012: 2,650
2013: 25,127
2014: 56,782
2015: 107,148 (That's NOT including those 214 deliveries of Tesla Model X in 2015)
Growth of the cumulative Tesla Model S fleet in 2013 was extremely high (almost 9 times 2,650).
Growth of the cumulative Tesla Model S fleet in 2014 was 125.98 %.
Growth of the cumulative Tesla Model S fleet in 2015 was 88.7 %.
Growth of the cumulative Tesla Model S fleet in 2016 will most likely be even lower than 50%.
To be really accuarate we have to do:
+ 214 deliveries of Tesla Model X in 2015
+ 2,500 Tesla Roadsters (2008 - 2012)
Tesla Fleet annual totals:
2012: 5,150 (That's 2,650 Tesla Model S + 2,500 Tesla Roadster)
2013: 22,477
2014: 31,655
2015: 50,580 (This annual total is not 100% accurate)
Tesla Fleet cumulative annual totals:
2012: 5,150
2013: 27,627
2014: 59,282
2015: 109,862 (That's including those 214 deliveries of Tesla Model X in 2015)
Growth of the cumulative Tesla Fleet in 2013 was extremely high (436.45 %).
Growth of the cumulative Tesla Fleet in 2014 was 114.58 %.
Growth of the cumulative Tesla Fleet in 2015 was 85.32 %.
Growth of the cumulative Tesla Fleet in 2016 will most likely be lower than 80%.
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