Elon tweets - count @ 198k & rethinking prod - east coast doomed?

[TytanX]

I'm perfectly OK waiting a few more months for Tesla to get the bugs out. Let the west coast be the guinea pigs

 

[RobStark]

More like 25% of the reservations will turn into actual orders. I'm sure many people will reconsider when it gets closer to order time and they have to spec the car out and write the "big" check or arrange financing.

I believe that out of the Model S reservations something like 90% bailed.

I believe that is 90% bovine feces.

 

[vjason]

Heh no problem. Have to be fair since I'm not at the actual bottom of the delivery food chain.

Tesla knows its business of course, so this is mainly me flapping my gums (what the Internet is for of course), but given that they are entering a what is likely to be their one time "hyper-growth" phase (think Apple ahead of the iPhone or even iPad) I just want them to be successful. Not saying they can't grow a lot more once the 3 deliveries level off (they will obviously) but hopefully they don't lose ground to other manufacturers in some areas because they were slow to ship cars there.

I work for a global company (EMC), and I very much appreciate when a country other than my own helps us grow during those periods when the US is not. it keeps the company much more stable than if our success was overly dependent on just a handful of countries. Here's hoping Tesla continues that trend for themselves and maintains their edge.

Regardless, the type of problems Tesla has today are "good" ones. Kudos to them, and all those that worked like (and will work like) maniacs to make magic happen late next year.

Thanks for thinking of us . Right hand drive countries were already going to way behind. I'm hoping that the RHD plans were linked to timing of production line modifications or planning or something and not pushed to after all the initial LHD reservers get their cars. That would mean the first 200K cars off the line would be for LHD Countries before we even get a look in. I was thinking it would be March April 2018 before we got one "down under". Two years I can handle but longer will be torture.

For the Tesla stock shorters though it still won't make me cancel! The car is sold to me, And we don't get any kind of incentives here and we pay for shippnig across the ocean and sales tax and stamp duty etc etc etc. Base here will be $60K. Whatever. I bought a Model 3 and I' ecstatic.

 

[McHoffa]

Anton Whalman in Seeking Lies actual stated in one of his comments that, all these hundreds of thousands of reservations will actually abandon Tesla and move to buy a Bolt once they get their hands on a test drive..... because Bolt is smaller and so easier to park.

HAHA! Dump a Tesla for a more expensive Chevy that has no supercharging? I just don't see ANYONE doing that.

 

[cgiGuy]

At some time they would need to pause & fill RHD orders & then go back to LHD orders otherwise the RHD orders would never get filled.

From the reservation confirmation email:

No because the US tax credit only applies to the first 200,000 cars they sold in the US. They have sold plenty overseas and will continue to without any affect to the US tax credit.

I think the point was, once the 200K number has been tripped, they have a finite amount of time to deliver as many as they can to other customers during the phase out period. So, each car being delivering overseas would potentially be one less car that could be delivered in the US and still qualify for (all or some of) the credit.

 

[Xminus6]

From the reservation confirmation email:
View attachment 170126



I think the point was, once the 200K number has been tripped, they have a finite amount of time to deliver as many as they can to other customers during the phase out period. So, each car being delivering overseas would potentially be one less car that could be delivered in the US and still qualify for (all or some of) the credit.

I've never seen anything that limits the incentives to a time period. I thought it was always tied to unit sales in the US.

 

[cgiGuy]

I've never seen anything that limits the incentives to a time period. I thought it was always tied to unit sales in the US.

Plug-In Electric Drive Vehicle Credit (IRC 30D)

"Qualified Plug-In Electric Drive Motor Vehicle Credit (IRC 30D) Phase Out
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period."

 

[model3fan]

I've never seen anything that limits the incentives to a time period. I thought it was always tied to unit sales in the US.

check out my write up (with the help from TMC) here if you're interested www.teslamodel3fan.com/incentives

 

[Red Sage]

I know... I believe it gets cut in half the first year after 200,000 U.S sales

Here, take a look at this chart:

The IRS works by 'Calendar Quarters'. So, if the 200,000th vehicle is built on any day during the period of January 1 through June 30, the first half of the year, then the following quarters, which would be July 1 through December 31, would see a reduction by 50% of the Tax Credit. Similarly, if it is built on any day during July 1 through December 31, the 50% reduction would take place at the beginning of the following year, so January 1 through June 30. After the period of 50% reduction ends, the following two calendar quarters would receive only a 25% reduction. Keep in mind, this is tied to the VIN for the particular car, and when it is built. Not necessarily when someone takes delivery of it as an end user. That is because vehicles sold through 'independent franchised dealerships' may sit on a car lot somewhere for months on end before anyone buys them. Whenever it happens, it would be to the advantage of new buyers if the 200,000th unit were built as early in January or June as possible, so that the $7,500 Tax Credit level could be maintained for all other units built in that six month period.

Tesla hasn't even delivered 100,000 vehicles in the US since their founding. To expect that in less than a year is too optimistic.

Well, I think that is the reason for Elon's Tweets, speaking of rethinking Production, as noted near the beginning of this thread. By my calculations, Tesla Motors needs to begin actual Production of Model ☰ at 2,000 units per week. That is equivalent to 100,000 units per year. But, they must ramp up from there to 4,000 units per week, or 200,000 units per year, almost immediately if they are to reduce 'The WAIT' for new orders from 12+ months to under 3 months within a reasonable time frame. I expect that during the first full year of Production, around 80% of Deliveries will be to US Customers.

The tax credit being phased by time is nice - if 200,000 is Q2 2018, then a Q1 2019 gets me $3750, Q2-Q3 at least gets $1875.

Please see the chart and description above.

But can they do that many in addition to the Model S and X's that they have to build? Remember in 2015 they only produced 50k cars. So to think that they will be able to even double the amount of output would be a huge feat. I think that is why Elon is saying to hurry up and get your reservations in.....it also is a good marketing line

They will have to do far more than merely double Production. Remember, Elon's goal for the end of 2015 was that the lines for Model S and Model X would have the same Capacity, up to 1,000 units per week, each. They slipped on that, but expect to at least approach the mark, Production of 800+ each, during Q2 2016. The Model ☰ will have to start at around 2,000 units per week, then ramp up to 4,000 per week in short order. This is something that must be done. Or bad things will happen.

More like 25% of the reservations will turn into actual orders. ... I believe that out of the Model S reservations something like 90% bailed.

Uhm... No. When the first Model S were Delivered in June 2012 there were about 10,000 outstanding Reservations. By January 2013, they had Delivered about 2,600 units. And there were 13,000 outstanding Reservations at that point. So, if by your count, 9,000 long-term Reservation holders bailed... They were replaced by 12,000 willing participants over a six month period.

Because of the tax credit phaseout, Tesla is going to have to plan to build *all* the US models before *any* of the non-US models, to maximize the benefit for their customers. Unless there's a tax credit being phased out in some other country too!

Uhm... No. Only the vehicles that are being offered for use in the United States of America count against the 200,000 unit total. Tesla Motors could ship 10,000,000 of Model ☰ to overseas markets, or Canada, or Mexico, and it wouldn't have any effect whatsoever on the IRS total for the Tax Credit. That is why the VIN is important, because the destination Country is part of its designation.

Thanks for thinking of us . Right hand drive countries were already going to way behind. I'm hoping that the RHD plans were linked to timing of production line modifications or planning or something and not pushed to after all the initial LHD reservers get their cars. That would mean the first 200K cars off the line would be for LHD Countries before we even get a look in. I was thinking it would be March April 2018 before we got one "down under". Two years I can handle but longer will be torture.

Yeah. The first two full calendar years of Model S Production were all to Left Hand Drive Territories. I'm certain that Elon would like to do better with Model ☰. In fact, he'd probably like to do better with the Model X as well. Looking at the placeholder interior for the Model ☰, I suspect the design is like that for the sake of making installations for Right Hand Drive vehicles that much easier. That said, I would be very surprised if locations such as the United Kingdom, Japan, or Australia received their cars within 15-to-18 months after the first car is Delivered in the US. So, I would expect April 2019 would be the earliest you could hope to see your Model ☰.

For the Tesla stock shorters though it still won't make me cancel! The car is sold to me, And we don't get any kind of incentives here and we pay for shippnig across the ocean and sales tax and stamp duty etc etc etc. Base here will be $60K. Whatever. I bought a Model 3 and I' ecstatic.

Thank you. I do hope you can hold out. I know that dborn at the Tesla Motors Forums literally waited a full four years to get his Model S in Australia. I expect your version of 'The WAIT' will not be quite as long.

 

[HookBill]

Good 'ol Anton on Seeking Alpha already tried his hand at it this morning. His argument is this: Tesla is losing $20K per car today. The 100K backlog of Model 3 orders x $20K = a loss of $20 billion. Therefore, Tesla will soon go bankrupt, so start shorting now.

Gotta love him, as well as his partner in crime Montana Skeptic.

Let's see now, Elon thanked the Model S and X owners for their purchases because those purchases helped fund the R&D for the Model 3. Seems to me that if Tesla lost $20K per car, the R&D must have been paid for with Monopoly money. This truly is, then, a bizarro world.

 

[YBT]

Crysal ball time: "Rethinking production" doesn't mean ramping Freemont faster (probably not possible anyway), but instead building out a second factory. You could make a case for RHD drive capable factory based in Asia. This mega machine could supply S & X from one line and 3 & Y from another to allow for far easier penetration of non-US markets. Of course it will require all materials to be routed to it - a sufficiently complex puzzle in itself to solve. Also may require Gigafactory Mkii in a nearby location to supply cells.

Food for thought ( & speculation)

 

[rnelsonee]

Here, take a look at this chart:

The IRS works by 'Calendar Quarters'. So, if the 200,000th vehicle is built on any day during the period of January 1 through June 30, the first half of the year, then the following quarters, which would be July 1 through December 31, would see a reduction by 50% of the Tax Credit. Similarly, if it is built on any day during July 1 through December 31, the 50% reduction would take place at the beginning of the following year, so January 1 through June 30.

Your text is an incorrect interpretation of the graphic. The tax credit does go by quarter, not half year. If the 200,000th vehicle is sold in Q1, then the full credit is available in Q1 and Q2, and half credit Q3 and Q4, then 25% in Q1 and Q2 the next year.

But where you veer is that if 200,000 is reached in Q2, then Q2 and Q3 has the full tax credit, and Q4 and Q1 (next year) has half, then Q2 and Q3 (next year) have 25%. Source: IRS.

>The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.

 

[ItsNotAboutTheMoney]

I hope the first level of priority is by day and then rank according to their "factors." The idea that a non-owner/employee from CA who reserved today could receive a similarly equipped car before an east coast non-owner/employee just does not seem quite right.

Sell 199,999 cars in the USA.
Then build up production, selling exclusively to the rest of the world.
Then produce and sell a _lot_ of US cars for the next 18 months.

 

[Seesaw]

There are GM and Toyota plants closing in Australia next year, we would happily welcome the Model 3 here!!

 

[HookBill]

There are GM and Toyota plants closing in Australia next year, we would happily welcome the Model 3 here!!

Do you have lithium mines too? Tesla could build another Gigafactory also thus solving that supply problem.

 

[Uncle Paul]

Due to the tax credit situation, I would believe that very few of the original reservers would cancel their order. Getting essentially a $10,000 or so reduction in costs, with following vehicles costing full price would be a strong incentive to maintain your place in line.

You could buy your Model 3, drive it 2 or 3 years and sell it for pretty much what you paid for it.

 

[Red Sage]

Let's see now, Elon thanked the Model S and X owners for their purchases because those purchases helped fund the R&D for the Model 3. Seems to me that if Tesla lost $20K per car, the R&D must have been paid for with Monopoly money. This truly is, then, a bizarro world.

Exactly.

Crysal ball time: "Rethinking production" doesn't mean ramping Freemont faster (probably not possible anyway), but instead building out a second factory. You could make a case for RHD drive capable factory based in Asia. This mega machine could supply S & X from one line and 3 & Y from another to allow for far easier penetration of non-US markets. Of course it will require all materials to be routed to it - a sufficiently complex puzzle in itself to solve. Also may require Gigafactory Mkii in a nearby location to supply cells.

Food for thought ( & speculation)

Please note that Panasonic uses their factory in Japan to prepare components of battery cells, but ships those materials to China for assembly. Once the battery cells are completed in China, they are shipped to the US. Once they arrive on these shores, they are transported to Fremont, where they are placed in Tesla battery packs. So, once a Tesla Factory is opened in China, the battery cells to be assembled into battery packs would come from China. Of course, shipments to Australia would still be from Fremont... The Chinese Tesla Factory would only support China's buyers. I'm sure that China has plenty of suppliers for glass, aluminum, steel, and plastics.

Fremont absolutely must be ramped up at a rate that greatly exceeds what has been done with Model X and Model X to cover Model ☰ orders. Because interest in Tesla Generation III vehicles will not be some 'flash in the pan', 'passing fad', or 'limited market'. It will be ongoing. It will be constantly growing. And it would simply not do to have a 24 month waiting list at 18 months into Production.

 

[ggnykk]

You guys shouldn't worry about passing the 200,000 tax credit cut off. It is pretty clear that better version of Model 3 (bigger base battery, autopilot 2.0 etc) will come right when all the tax credit is gone. Tesla is not stupid in terms of product planning road map.

 

[Lerxt]

There are GM and Toyota plants closing in Australia next year, we would happily welcome the Model 3 here!!

Great idea. Build a factory in one of the most expensive places to do business in the world. And with an asset bubble beginning to deflate. Oh and then there is the tax....

 

[neroden]

Sell 199,999 cars in the USA.
Then build up production, selling exclusively to the rest of the world.
Then produce and sell a _lot_ of US cars for the next 18 months.

Hah! Remember they're selling Model S and Model X at the same time, though. I think they can't play it THAT tight.

Perhaps it actually does make sense to start with Canadian deliveries (for example) during the slow ramp-up period, so that they're at full speed before they reach the 200,000 number in the US.