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Elon Musk: "50% annual growth" + "500,000 in 2020". Which is most likely to occur?

Discussion in 'TSLA Investor Discussions' started by Benz, Jan 15, 2015.

  1. Benz

    Benz Active Member

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    Elon Musk has made two projections about future growth: "50% annual growth" + "500,000 in 2020". Which is most likely to occur?

    Is it possible that both projections can be correct at the same time? Or can both projections not be correct at the same time?
    How do the numbers work out?

    If we assume that there were (at least) 32,000 Tesla Model S deliveries in 2014, then "50% annual growth" would imply:
    2013 - 22,477 Tesla Model S deliveries
    2014 - 32,000 Tesla Model S deliveries
    2015 - 48,000 Tesla Model S deliveries
    2016 - 72,000 Tesla Model S deliveries
    2017 - 108,000 Tesla Model S deliveries
    2018 - 162,000 Tesla Model S deliveries
    2019 - 241,000 Tesla Model S deliveries
    2020 - 361,500 Tesla Model S deliveries

    Then that would imply that a very large portion of the 500,000 cars in 2020 would be already occupied with the Tesla Model S only.

    Then we haven't even included the delivery numbers of the Tesla Model X and the Tesla Model 3 yet.

    What does this mean:
    1 - The Tesla Model S delivery numbers just cannot keep on growing at 50% year after year.
    2 - Or the total number of cars in 2020 is much higher.

    Or maybe a bit of both?
    And that is most likely, I think.

    So, what is a more likely scenario then?

    Tesla Model S deliveries:
    2015 - 50,000
    2016 - 60,000
    2017 - 70,000
    2018 - 80,000
    2019 - 90,000
    2020 - 100,000

    Or would that be a too conservative projection of growth?

    What projection of growth would be more realistic according to you?
     
  2. tftf

    tftf Member

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    There's more predictions coming from Musk lately:

    http://www.reuters.com/article/2015/01/14/us-autoshow-tesla-musk-idUSKBN0KM2FH20150114

    Going from 500k by 2020 to "a few million per year" in 2025? When will the required battery plants be built around (around 2021 is the latest possible date)? What about cap ex/revenues and where will be billions come from for all the car plants and betry factories?

    The 2025 target is next to impossible to achieve in my opinion given the cap ex and time constraints (details over at SA).

    The 2020 goal is at least attainable from the supply side with the available infrastructure at full capacity both in California and Nevada.
     
  3. RationalOptimist

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    I don't think Elon ever promised ongoing 50% growth for Model S alone. I took him to mean that the company would continue at 50%+ annual growth for the foreseeable future. If 2020 was 60k Model S, 60k Model X and 380k Model 3, that's 500k vehicles and approx 50% sustained $ growth.
     
  4. HansWurst

    HansWurst Member

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    ^ this

    as far as I understood it he talked about the production run rate implying in the sense of the sum of all models
     
  5. Benz

    Benz Active Member

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    That is not correct.
    The projection about future growth of "50% annual growth" was made by Elon Musk during the Tesla Motors, Inc. Third Quarter 2014 Financial Results Q&A Conference Call (Wednesday, November 05, 2014, 5:30 pm EST).

    And that projection of "50% annual growth" is just for the Tesla Model S. This was specifically mentioned by Elon Musk during the Conference Call.

    After about 16:30 minutes during the Conference Call Elon Musk says: "That's why we feel confident predicting a 50% growth in orders and deliveries fairly comfortable next year (2015), and then at least 50% growth in 2016 again, in subsequent years too.

    After about 17 minutes during the Conference Call the reporter asks: "The 50% is just Model S though, is that right?"
    And Elon Musk replies: "That's correct, .... fair enough. It will be some number greater than 50% if you include the (Model) X".

    Maybe you would want to listen to the recorded broadcast of the Conference Call for yourself. Then you surely will be convinced about it.

    And I didn't say that Elon Musk promised it.
     
  6. ScepticMatt

    ScepticMatt Member

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    While the 50% growth for the model S might be true next year. I don't think he meant 50% model S growth until 2020.
     
  7. Benz

    Benz Active Member

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    That could possibly be correct.

    The projection about future growth of "50% annual growth" was made by Elon Musk during the Tesla Motors, Inc. Third Quarter 2014 Financial Results Q&A Conference Call (Wednesday, November 05, 2014, 5:30 pm EST).

    And that projection of "50% annual growth" is just for the Tesla Model S. This was specifically mentioned by Elon Musk during the Conference Call.

    After about 16:30 minutes during the Conference Call Elon Musk says: "That's why we feel confident predicting a 50% growth in orders and deliveries fairly comfortable next year (2015), and then at least 50% growth in 2016 again, in subsequent years too.

    After about 17 minutes during the Conference Call the reporter asks: "The 50% is just Model S though, is that right?"
    And Elon Musk replies: "That's correct, .... fair enough. It will be some number greater than 50% if you include the (Model) X".

    Maybe you would want to listen to the recorded broadcast of the Conference Call for yourself. Then you surely will be convinced about it.

    The question to ask here is: "how many subsequent years will there be a annual growth of 50% in orders and deliveries?"
     
  8. ScepticMatt

    ScepticMatt Member

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    #8 ScepticMatt, Jan 15, 2015
    Last edited: Jan 15, 2015
    I heard it live. My take was 50,000 Model S, 10,000 ish Model X next year.
    I doubt 300,000+ Model S in 2020 is realistic due to demand constraints, and neither do I think Musk believes that.
     
  9. Benz

    Benz Active Member

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    Yes, that would be reasonably possible.

    In the beginning of the Conference Call Dan Galves with Credit Suisse asks: "Just wondering if you can give us any additional colour on how you have gotten convident in 50,000 Model S deliveries in 2015?"

    Elon Musk then said: "Actually I don't think 50,000 is going to be super hard, because if you look at sort of how we are exiting the year in production and demand. I mean I think 50,000 seems like pretty solid number. We don't want to sort of overreach but I think 50,000 is a pretty achievable number. That's a modest extrapolation of where we will be at the end of the quarter".

    Later on Elon Musk says: "50,000 with high confidence".
    So it will likely/probably be more than 50,000 Model S deliveries in 2015.
     
  10. Benz

    Benz Active Member

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    The question to ask here is: "how many subsequent years will there be a annual growth of 50% in orders and deliveries?"

    Indeed, it cannot keep on growing with 50% for a great many years. Meaning that the % of growth has got to decline at some point in time.

    I also think that more than 300,000 Model S cars in 2020 will not be very realistic.

    But the final sentence in my first post in this thread is:

    What projection of growth would be more realistic according to you?

    If you have a prediction of your own, then please share it with the rest of us.
     
  11. jhm

    jhm Active Member

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    Musk speaks in round numbers. Lets look at what 500k in 2020 and "a few million" in 2025 imply as annual growth rates.

    From 33k in 2014 to 500k in 2020 implies annual growth rate of 57% = (500/33)^(1/6) -1.
    From 500k in 2020 to 3M in 2025 implies annual growth rate of 43% = (3000/500)^(1/5) -1.

    From 33k in 2014 to 3M in 2025 implies annual growth rate of 50.67% = (3000/33)^(1/11) - 1.

    So it is quite natural for Musk to speak of an annual average growth rate of 50% over the next 11 years or so. Over the next 6 years the growth rate (57%) is likely to be a little higher than over the following 5 years (43%). When both the gigafactory and Model 3 ramp up I think we'll see a little boost in annual growth, but over the next decade it all averages out to about 50% annual growth.

    There is no need to parse Musk's words so finely that you imagine he is contradicting himself. And to stress such imagined contradictions to absurdity is a standard FUD practice. There is no way to be super precise about long range growth. So it is reasonable to allow Musk to speak in round numbers. 50% annual growth sustained over ten years is pretty awesome however we get there.
     
  12. ecarfan

    ecarfan Well-Known Member

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    Elon is well known for setting ambitious targets. That's fine, it give the company something to shoot for. He often does not meet those targets, but the company still does well and as a shareholder I'm fine with that.

    I am certain that the 50% annual growth includes all car models. It obviously cannot be based on the S alone.
     
  13. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    Given that he was wrong on Europe and wrong on China I think it's best just to ignore his estimates anyway. Just focus on execution.
     
  14. tftf

    tftf Member

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    #14 tftf, Jan 15, 2015
    Last edited: Jan 15, 2015
    It's much harder to go beyond 250k and especially beyond 500k or 1M cars at these growth rates (especially when battery supply is needed as well) in latter years.

    50% annual growth is maybe feasible and realistic until 2018-2020 in a best-case scenario (reach 250-500k with existing infrastructure). I don't understand why he felt the need to extrapolate this until 2025.

    It's counter-productive if he keeps announcing unrealistic goals and will end in disappointment and credibility problem over time (Earlier examples include: Model 3 on sale by late 2014 at just $20-30k, 1000 cars sold in Germany per month by end of 2014, Model X on sale by late 2013 etc. and now the 2025 sales goal of "a few million cars a year").

    Musk/Tesla has a long history of over-promising on sales targets and delivery dates.
     
  15. Krugerrand

    Krugerrand Active Member

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    Let's be fair. And wrong on the initial guess of how popular the Model S would be - which is wrong in the other direction. :wink:

    - - - Updated - - -

    Because that's how far ahead he and Tesla are thinking. They have to think that far ahead to lay the groundwork via factories in Europe, China, east coast USA, along with additional Gigafactories. If he hadn't thought as far ahead as he did with regards to Model 3, then the current Gigafactory wouldn't already be being built.

    Not according to what his companies have already achieved.

    That's one possible outcome. Fortunately, there's a lot of other possible outcomes as well.

    Meh. All separate events, unrelated, with at least two of them still in progress having the possibility of happening.

    He's admitted he has an issue with punctuality and is recalibrating. The more important bit of information is that when says specifically it'll be done, it gets done, however long it may take. Examples for you: Roadster will be built to prove EVs are not just golf carts, Model S will be built and it'll be a great car, compelling and out perform it's ICE equivalent, Gigafactory will be built,...
     
  16. pGo

    pGo Member

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    I would not read too much between the lines when Elon speaks. Just consider it as huge growth year over year.

    When Elon was asked how (technically) does he think that the rocket landing on the floating deck has 50% chance of success, he responded, no technical reason. He just felt like saying 50%.
     
  17. tftf

    tftf Member

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    #17 tftf, Jan 15, 2015
    Last edited: Jan 15, 2015
    And that's a problem at Tesla and for Tesla in my opinion (maybe less so at Space X, it's not a public company).

    A CEO of a publicly traded company (with billions in convertible bonds sold to investors maturing in a few years: Tesla Convertible Debt Electrifies Long-Term Investors - WSJ ) should not make such projections and sales target lightly.

    The 2025 sales goal was picked as a Reuters headline (see my link above in this thread), millions of people around the world read it.

    Musk didn't make these projections off-hand after work with employees in an informal setting or in private with friends. He was on stage in Detroit with a packed room full of auto execs and journalists.

    That's all for now.
     
  18. Familial Rhino

    Familial Rhino Endangerous Herbivore

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    The 50% chance for recovering the first Falcon stage was a tweet in response to a tweet. That one was just a guess, as he said on Reddit, and it couldn't have possibly been anything else, the nature of the event being what it is.

    The production growth rate estimate is something he has way more visibility into. Your comment is only relevant if one agrees with pGo's interpretation of Musk's words, which is not a given by any stretch. I have no reason to doubt that Musk meant what he said about production growth. Tesla beating or missing that estimate doesn't make Musk cavalier, it just makes him wrong. Nobody, be it an engineer, CEO, analyst, or random message board poster, can guarantee an estimate. The fact that he tries to answer the question to the best of his ability should not be held against him.

    That's all for now.
     
  19. Benz

    Benz Active Member

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    I think that both projections about future growth ("50% annual growth" + "500,000 in 2020") are not totally correct.


    I actually think that the total number of cars in 2020 will be more than 500,000.
     
  20. Maknyuzz

    Maknyuzz Member

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    I think 50% growth cannot continue forever. Law of big number, at some point it will plateau, growth will be compressed in teens, single-digits. Imo, a good benchmark is looking at other luxury cars sales (BMW M5 M7, Audi A6 A7, Mercedes S Class, Porsche Panerama).

    But then again, if Tesla manage to continue to drive down battery cost, improve drivetrain efficiency, continue to roll out charging stations + improve charging speed rate, improve autopilot and connectivity of the cars, who knows. Also, I think there is a need for Model S facelift in 2016-2017.

    I dig around and here is the addressable market for Luxury sedan, crossover, and mid-size sedan.
    - Luxury Sedans global sales was ~1.1M cars last year
    - Luxury Crossover SUV global sales was ~900K cars last year.
    - Premium Mid-size sedan sales was ~3.25 cars cars last year.

    Now taking Benz numbers.
    If we assume that there were (at least) 32,000 Tesla Model S deliveries in 2014, then "50% annual growth" would imply:
    2014 - 32,000 Tesla Model S deliveries --> 3% market
    2015 - 48,000 Tesla Model S deliveries --> 4.6% market
    2016 - 72,000 Tesla Model S deliveries
    2017 - 108,000 Tesla Model S deliveries
    2018 - 162,000 Tesla Model S deliveries
    2019 - 241,000 Tesla Model S deliveries --> 23% market share
    2020 - 361,500 Tesla Model S deliveries --> 33% market share

    The market is definitely huge.. but Tesla needs to continue to innovate "reckless"-ly. Imo, autonomous, luxury/premium differentiation such as partnering with Louis Vuiton and Burberry for leather upgrade. Charging infrastructure and charging speed is also important.
     

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