Fear of Delays, and why they are unfounded

[AngelArm1110]

It has certainly been a great week for Tesla, now being at 325 thousand reservations, and in all likelihood reaching their entire forecast for 2020 before part 2! The car is amazing, I placed my reservation just yesterday, despite only ever having seen it in pictures and video, a situation shared by 99.9% of reservation holders, so this really is a big deal. Despite all this however, people still seem rather worried about there being massive delays with this car, and serious questions are being asked about whether or not Tesla really can deliver.

These concerns are rubbish, and here's why; for one thing, they already have all the know how, and technical expertise to build a really good electric car. The Roadster and Model S were their development platforms, to varying degrees, so the delays with those can be largely dismissed. Then there's the comparative lack of complexity with the Model 3, it has no automated door handles, no falcon wing doors, a much more simple interior, and has very likely benefited greatly from a design and execution standpoint due to the problems solved for it's ancestors. The only major bottleneck that they may experience is a shortage of batteries from a partially operational Giga factory, but that's a problem that basically solves itself the longer you wait.

So to summarize, I don't think we have anything to worry about, the Model 3 is such an unbelievably important car for Tesla, and the rest of the world. They won't let us down.

 

[Gilzo]

That isn't the only bottleneck. It's one of their challenges but there's certainly many more. Another big challenge is ramping up their Freemont factory....the list goes on but I'll stop there.

 

[chipmunk]

I certainly hope you're right, but don't forget about the potential complexity of the yet to be released steering controls and system which Elon says "feels like a spaceship."

 

[Jleafs]

I'm certainly rooting for everything to go smoothly, but this is just silly Pollyanna optimism. As Musk has said himself, making 1 of something isn't hard, making lots of them IS hard. Large scale manufacturing is hard, and nobody on the planet has a proven track record of building hundreds of thousands of these things.

Tesla won't let us down because now it's unbelievably important? Glad to know all the preceding delays were because it wasn't important.

 

[amb3rgris]

That isn't the only bottleneck. It's one of their challenges but there's certainly many more. Another big challenge is ramping up their Freemont factory....the list goes on but I'll stop there.

I'll agree with Gilzo on this one. As the recent SEC filing regarding the Model X illustrates, there are over 8,000 unique parts but only a half dozen caused the production issues.

Personally, I don't think I'm too concerned about major "delays", in that I believe Tesla has spent a lot of time focusing on the manufacturability of the M3.

But, my main concern is the unknown ramp plan that Tesla has in place. All they've said is they will start deliveries in late 2017. So while I'm confident Tesla has a solid plan in place, no one knows what that plan is, other than it starts in late 2017. That could mean just a few hundred units in 2017, maybe a few hundred a week for a quarter, then 1 or 2 thousand... If that's the case, it'll take years just to get through the reservation from this initial few days.
Of course, I'm hoping this isn't the case, and they have a full production line and guaranteed parts lined up for hundreds of thousands of cars before they even start initial production. Which hopefully means they can get to making maybe 5,000 M3's a week within the first couple of months of production.

 

[kort677]

"Those who cannot remember the past are condemned to repeat it."
Tesla's past history of hitting promised dates for rolling out new models hasn't been exemplary, I hope for the 325k people who are awaiting their M3s have a lot of patience.

 

[mtndrew1]

I think making and selling the Roadster with the resources they had on hand was damn-near impossible. On a scale of 1-10 it was a 9. Just one nail-biting moment to the next, day after day.

I think making the Model S on a new platform with their own drive unit and their own battery chemistry with their own global charging network was very, very unlikely to succeed when viewed from the context of the year 2011 or so. Of course it didn't go perfectly, but it was a masterful balance of resources and engineering talent within a very strict budget that resulted in one of the finest cars in its class, regardless of propulsion. Same 1-10, I think the Model S was a 7 in difficulty. I think most at the time thought Tesla might sell a few thousand copies of the Model S and then fizzle out, like Fisker.

The Model X has had its challenges but they all seem to be with elements not related to generally-accepted car features (unique doors, windshield, seats, etc.). Aside from the unique bits, the X was probably a 5 in difficulty and it's pretty clear Tesla could have spit out a conventional S-based CUV on time, on budget, and with reasonable popularity had they pulled back on the show stopper features.

As for the Model 3, Tesla has demonstrated an ability to learn from mistakes and hasn't included anything too out-there as far as features go. The car doesn't have billionaire doors (that open "like this") and it has traditional seats. Tesla has battery pack and drive unit engineering and production down to a science at this point. They have metalworking experience. The on board charging equipment is old hat. They now understand the importance of supplier relations and chain management.

As compared to retrofitting a Lotus chassis on a shoestring budget or launching a new sedan platform, new charging infrastructure, tooling up a new (old) factory, and balancing very thin resources to make it all happen, I think the Model 3 has comparatively few roadblocks ahead of it.

It's really anyone's guess at this point, but it seems to me as though the Model 3 only has two major headwinds to on-time launch and those are Gigafactory progress (ahead of schedule) and Fremont capacity buildout. They've overcome much more with far fewer resources at their disposal in the past and I have reasonable confidence that Tesla is gonna ace the 3 deployment. Or at least not FUBAR it.

 

[StraightDave]

Model 3 isn't complex? Batteries are not the only major bottleneck. Cash to build the Model 3 is THE bottleneck.

 

[Snowdog]

There is every reason to expect this won't be another Model X.

You learn more from your mistakes, than you do when things go smoothly. Tesla would have learned a lot from Model X.

I would bet every part causing delays with the Model X are related to the unusual Features.

Model 3 really doesn't seem to have these kinds of unusual features.

Will it be easy? NO. Is it guaranteed, that they will ship on Time? NO.

But it really isn't likely it will be another Model X type screwup.

 

[eisbock]

Meh, normally I would be in the same boat as you. Tesla has done all the R&D on the more expensive models, so the cheaper model should be easy to make since it'll be dumbed down and just rehashing what they already know to make it easier to manufacture... right?

But Elon and Tesla can't leave well enough alone. The Model 3 claims to have a different steering system, new AC/heat distribution (no vents?), ominous mentions that it will be based on entirely new technology, new door handles (again), and I'm sure there are many other points I'm missing.

Sure, they know how to do what they do now, but they keep doing new things and that will inevitably create problems and delays. I really hope I'm wrong though, and these advancements aren't going to be the next falcon wing doors.

 

[plankeye]

I also bet they'll be raising more money to help speed things up. I think the 325K orders told them (and investors) that there is enough interest in this car that it's worth a little risk to sink more $ in at an earlier stage. More $ will hire more staff and help purchase equipment earlier/faster than they originally planned.

 

[igotzzoom]

I'm realistically hoping to get mine spring/early summer 2018. As long as it's in that timeframe, I'll be happy.

 

[Snowdog]

I also bet they'll be raising more money to help speed things up. I think the 325K orders told them (and investors) that there is enough interest in this car that it's worth a little risk to sink more $ in at an earlier stage. More $ will hire more staff and help purchase equipment earlier/faster than they originally planned.

I agree, I expect an announcement anytime about either a round of favorable financing, or a stock offering.

 

[ElectricTundra]

Until I saw the steering system tweet I'd thought they'd be on time. I'd thought Elon wouldn't want a repeat of Model X. I'm not so sure now. We'll see.

 

[BrianC]

They need to increase production from 1,000 per week to 1,000 per day.... That is what worries a lot of people.

Tesla can't release the car onto the market and have 100-200 a month trickle out for 4 months like the S and X, they need to be at a starting point of 300-400 a day and ramping up to full production quickly IMO

 

[plankeye]

One of the scariest parts is the delivery of the cars. They can't just fill up car carriers and ship them off to dealers. They somehow have to get each car delivered to individual people. Imagine 1000 cars per day being delivered to individual people. They would have to either own their own car delivery company, or be the exclusive customer of a really good existing company.

 

[peteyswift]

In my simple mind, I'd want them to finish development on this thing like next week. Then tool up for the next year. Then blow everyone away with some early deliveries. But, yeah, the stakes get higher with every x00,000 reservations...

 

[yesup]

These concerns are rubbish, and here's why; for one thing, they already have all the know how, and technical expertise to build a really good electric car.

They have to know how to make 1,300 cars per week (Q4 2015).
But it is a entirely different thing to make 4,800 cars per week as they are targeting or 9,600 cars per week as the maximum output capacity.

Even at a few hundred Model X per week, they are having a lot of quality issues - including many not related to falcon wing doors.
They have got to do better with Model 3 - a lot better and a lot faster.

So to summarize, I don't think we have anything to worry about, the Model 3 is such an unbelievably important car for Tesla, and the rest of the world. They won't let us down

That's what we all hope for. But you have trivialized the monumental task facing Tesla - it is going to be tough, very tough...
and it would be an amazing feats if they can pull it off.

 

[Discoducky]

Hypothetically....let's say TM has learned from their earlier challenges with regards to delivering too many innovative features at once. And let's say they've got a pretty good hold on the needs of the owners once the cars are out on the road as well as the charging infrastructure needs. Heck, let's say they have it all figured out in a nice roadmap with appropriate swim lanes and milestones. Each driven by a highly competent and wildly smart leader eager to make their mark on the timeline of global transportation.

What keeps me awake at night, tightly clutching my TSLA stock, is supply chain support. Every ECO (Engineering Change Order) needs to be thoroughly scrutinized, but even more important are the upstream challenges that lead to the ECO being needed in the first place. Root causes need to be identified much earlier in the design process to not cause catastrophic (i.e. structural or major design changes). For a car to ship in Q4 2017, crash testing could be the bottleneck as it requires so many other critical path parts to be integrated. I hope TM realizes that some pieces of the schedule CANNOT push out, hoping that the team will suck it up later. DO NOT sacrifice today for tomorrow and push the critical decisions that are SAFE to be made later. TM needs to think about bottlenecks, prepare for them now and put in place remedies or mitigation plans to these risks now. At least if they have a great risk process it can save valuable time later. These are all needed to feed the supply chain process. Placing orders for parts at this magnitude needs to be crisp, clear and confident. No wavering or loss of focus. No partially formed ideas about what might work and what might not work. Designs that have been vetted and approved by the engineers and designers that have had lots of sleep so their minds are well aware of what is happening.

Derive PPAP (Production Parts Approval Process) dates now with folks on staff who have done this before at this magnitude. Work out contracts with suppliers now that are rock solid (well established businesses with a track record of making their dates) and have their A-teams 100% focused. Take every engineers worries to heart as this is your best 'canary in the coal mine' warning system.

 

[johnnyS]

From my observations, model 3 will be a really cool car because Elon will push the limits. In Tesla talk, deliveries in 2017 means 3 deliveries on December 31, then a trickle for the first quarter of 2018. Be patent, it will be worth the wait.

 

[mhan00]

Your optimism is nice, but it trivializes how difficult this will be. This could be Tesla's launch into a truly major automaker that could overtake one of the majors, or it could doom them(the actual result will probably be somewhere in between). As others have noted, it's the SCALE of the task that is truly the problem. Not only manufacturing (which is a monumental task in and of itself since they need to ramp up not only their NUMMI factory but also the gigafactory), but also getting the resources in place to provide service and maintenance for the cars they manufacture and deliver.

As any dedicated follower of this board knows, Tesla has already had some pretty major issues with reliability of their vehicles with customers having to take their cars back for a variety of minor and sometimes major issues that need to be fixed. They've mostly satisfied their customers by providing a superior service experience with loaners and home technicians, but that's for relatively few cars in comparison to the scale we are talking about now. Can Tesla maintain that same level of service with lower margin cars like the III, and a LOT more of them? Can they ramp up their production quick enough to maximize the number of people who can take advantage of the tax credits while still minimizing the number of manufacturing issues? They will absolutely want to do that, because a good chunk of those reservations likely go away once the credits expire, but if they push to fast too soon it could be very bad. Those are major questions that aren't easy to address.

Tesla Superchargers are getting overloaded with major queues on major travel routes during busy vacation travel times. That problem is only going to get worse with the Model III and Tesla will not only have to build out more spots - as they're already doing - but they're also going to have to figure out a system to help address queues, and the dreaded issue of locals hogging the chargers, which is likely to get even worse with the III since the price level is at a point where more people who don't necessarily own their own homes will be buying the car. A huge benefit to the electric car is the ability to charge at home or work and never having to worry about "filling the tank". What happens if a bunch of people who don't have nighttime charging buy the car start complaining about charge times and super charger unavailability? With more people will also come a lot more voices complaining, which could negatively affect people's perception of the viability of the electric car.

These are all addressable issues, but they are not at all easy. Tesla could come out of this smelling like roses and truly claim their space as the Apple of cars, or they could fumble and even conceivably collapse if they fumble badly enough. I know which way I'm betting since I picked up even more stock when it was at 180 a few weeks back, but nothing is guaranteed and the next couple of years are crucial.