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Model X remains on track for start of deliveries in late Q3

NigelM

Recovering Member
Apr 3, 2011
13,394
562
Northern Virginia
Tesla_Q2_2015_Shareholder_Letter.pdf

As we prepare to launch Model X in September, we are building more validation vehicles, executing final engineering and testing work, enabling our new manufacturing equipment and finalizing arrangements with our suppliers. We have been producing release candidate Model X bodies in our new body shop equipped with more than 500 robots as we fine-tune and validate our production processes.
We just concluded a planned one-week Fremont factory shutdown and made changes in stamping, Model S body center, drive unit production, battery module and pack production and general assembly to allow for an elevated level of production and efficiency. Since Model S and Model X will both share the general assembly line, we used the week to validate the newly installed equipment by completely building several Model X test vehicles. This month, we plan to start painting Model X in our new paint shop well before transitioning Model S painting there, to help de-risk this portion of our overall production ramp.

In Q3, we expect to produce just over 12,000 vehicles, representing a more than 60% increase from a year ago, and deliver approximately the same number of vehicles as in Q2, despite having one week of planned shutdown in Q3. This includes a small number of Model X deliveries.

In addition, the timing of the Model X production ramp and high total deliveries in Q4 create operational challenges for our delivery organization towards the end of the year. This adds complexity in predicting our delivery rate with precision.
Looking ahead to next year, we are highly confident of a steady state production and demand of 1,600 to 1,800 vehicles per week combined for Model S and Model X.

While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries. We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter.
 
I listened to part of the conference call playback up to around 17:20, and when the first non-bank questioner (asian voice) started asking factory technology questions (about Robots! Oh My!), Elon said at 17:13 -- 17:19 "..., [um 5*] we expect to do our first delivery of production Model X by the end of next month.", meaning September 30, 2015.

http://edge.media-server.com/m/p/pt5xzp99

All this talk of supplier volume reminds me of lessons my boss (a Cost Accountant) at Stryker Endoscopy taught me, just as a data entry person ... things like not single sourcing, etc.. Definitely lots of room for educated people to help out in a factory.

---

* "..., [um 5*]" signifies that he had a comma, then a number (I recall ~5) of his cute authenticating "and um uh um uhs" and so forth between the comma and the quoted text, which I did not transcribe. The number of utterances of uhmish ums was about a small handful, so [means] "pretty good but not precise words follow this, and I'm trying to improve their accuracy to a reasonable level", of course, as it does with most of us.

p.s., if this is a trimodal encrypted code, I'm so f'd trying to know what that means. 3^~5~=243. One byte. Not that hard ...
 
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WSE51

Member
Supporting Member
Aug 24, 2012
126
90
Park City, Utah
I recall how Tesla delivered a small number of Founder cars in June 2012 and then none until September which I recall was about 250 units. I sure hope that the Model X ramp is much faster, and since they have so much experience with the Model S, there is good reason to believe it will be a faster ramp.

Consider that the shareholder letter said " Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter." .... and let's work backwards assuming that the last week in December is 800 units, and assume that production increases by 50% each week, that would imply that the 4 weeks in December are currently projected to be making 237, 356, 533 and 800 Model X vehicles, for a total of 1,926 in the month of December if no parts delays. And if November is also up 50% each week, it would mean only 47, 70, 105, 158 = around 380 for all of November... with perhaps 75 in October we would be looking at under 2,500 deliveries in calendar 2015.
 
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I recall how Tesla delivered a small number of Founder cars in June 2012 and then none until September which I recall was about 250 units. I sure hope that the Model X ramp is much faster, and since they have so much experience with the Model S, there is good reason to believe it will be a faster ramp.

Consider that the shareholder letter said " Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter." .... and let's work backwards assuming that the last week in December is 800 units, and assume that production increases by 50% each week, that would imply that the 4 weeks in December are currently projected to be making 237, 356, 533 and 800 Model X vehicles, for a total of 1,926 in the month of December if no parts delays. And if November is also up 50% each week, it would mean only 47, 70, 105, 158 = around 380 for all of November... with perhaps 75 in October we would be looking at under 2,500 deliveries in calendar 2015.

If they calculate with lower ramp up speed of say 20% each week which is still very high the production rate will be about this:

Week Produced
41
90
42
108
43
129
44
155
45
186
46
223
47
268
48
322
49
386
50
463
51
556
52
667
53
800
Total 4,351
 

timf

Active Member
Apr 14, 2013
1,043
165
Michigan
If you believe all the rumors, Tesla's limiting factor is going to be parts deliveries. Depending on what alternate sources they have for long lead time parts, it could be like the Model S where there's no deliveries for a couple months after delivering the first few vehicles with hand built or pilot run components while they wait for the supply chain to catch up. There's no question the factory and personnel are in place this time around to ramp production quickly. However, if they're missing any parts they can't build cars. I think the ramp is going to look more like 0>0>0>0>0>0>400>800 than 100>200>300>400>500>600>700>800.
 

vandacca

ReActive Member
Oct 13, 2014
3,371
2,250
Hamilton
"According to our sources, Tesla has still not placed orders with at least three Tier One suppliers for necessary Model X components."

http://www.greencarreports.com/news...due-to-slower-model-x-production-ramp-sources

I love the fact that Tesla has designed and built a BEV from the ground up.
I love the fact that Tesla has really pushed innovation into every single part and feature of their vehicles.
I love the fact that Tesla has designed and built a whole infrastructure to support these vehicles.

However, blaming tier-one suppliers for any delays seems disingenuous to me. If Tesla was indeed ready to build this vehicle and had all their designs and production ready to go, they could have put in their orders and given their tier-one suppliers plenty of time to produce parts. They could have stored these parts until needed. I get it that they don't want to incur additional storage costs and pay for parts they won't be using right away. I get it that it would be best to have Just-In-Time delivery and a streamlined production line, but until they get their act together, they could have operated in this fashion for a few months. In my opinion, Tesla does not yet know how to do supply-chain management well, and they probably could take a lesson or two from Tim Cook. Blaming their suppliers just seems like a childish attempt to push the blame somewhere else. Pushing the blame is not going to make any difference to how many vehicles they ship, or to their stock price or to their bottom line.

Maybe someone in the industry has a different perspective and can further enlighten me?


I really wish Elon hadn't uttered those words and took responsibility for his ship. I know this is all new to him and he is learning as he goes along, so I'm willing to cut him some slack. But hopefully he'll learn from this experience and have a more professional attitude moving forward.

Go Elon!
 

techmaven

Active Member
Feb 27, 2013
3,618
9,768
I love the fact that Tesla has designed and built a BEV from the ground up.
I love the fact that Tesla has really pushed innovation into every single part and feature of their vehicles.
I love the fact that Tesla has designed and built a whole infrastructure to support these vehicles.

However, blaming tier-one suppliers for any delays seems disingenuous to me. If Tesla was indeed ready to build this vehicle and had all their designs and production ready to go, they could have put in their orders and given their tier-one suppliers plenty of time to produce parts. They could have stored these parts until needed. I get it that they don't want to incur additional storage costs and pay for parts they won't be using right away. I get it that it would be best to have Just-In-Time delivery and a streamlined production line, but until they get their act together, they could have operated in this fashion for a few months. In my opinion, Tesla does not yet know how to do supply-chain management well, and they probably could take a lesson or two from Tim Cook. Blaming their suppliers just seems like a childish attempt to push the blame somewhere else. Pushing the blame is not going to make any difference to how many vehicles they ship, or to their stock price or to their bottom line.

I really wish Elon hadn't uttered those words and took responsibility for his ship. I know this is all new to him and he is learning as he goes along, so I'm willing to cut him some slack. But hopefully he'll learn from this experience and have a more professional attitude moving forward.

Go Elon!

I didn't take Musk's comments as blaming suppliers at all. Instead, he's hedging the projections, saying that they believe they can ramp, but snags would cause them to miss projections. This isn't about blame.
 

Krugerrand

Enough of the 🐩, back to 🐈‍⬛
Jul 13, 2012
12,166
77,217
Tesla friendly place
I didn't take Musk's comments as blaming suppliers at all. Instead, he's hedging the projections, saying that they believe they can ramp, but snags would cause them to miss projections. This isn't about blame.

Yeah, I'm still looking for factual evidence of this so called 'blame'. Secondarily, *yawn* about the whole article. With years of the media getting even the most basic facts about Tesla wrong, I'm not taking this article any more seriously or accurate than the average Tesla article. And 'secret source' to only then go on and state certain 'high strength aluminum parts and brake lines'... Yeah, that's keeping your source secret - not.

Unless you've been a fly on the wall, none of us have any idea what's really going on. It's all just guessing, speculation and making assumptions. So, I'm going to guess, speculate and assume the Tier 1 suppliers are just pissed because Tesla has left them out of the loop that identifies them as no longer suppliers of Tesla. Afterall, there can't be any other reason for a supplier to squeal to the media. Sarcasm off.
 

vandacca

ReActive Member
Oct 13, 2014
3,371
2,250
Hamilton
I didn't take Musk's comments as blaming suppliers at all. Instead, he's hedging the projections, saying that they believe they can ramp, but snags would cause them to miss projections. This isn't about blame.

Bold highlighting is mine.

Thanks techmaven. I guess we can agree to disagree. It seems like a set-up to me, laying the ground work for blame when they don't meet their targets. In fact, I have already reset my expectations that Tesla is not going to be producing large number of Model-X this year. If they can get surpass 1000 deliveries, I'll be impressed.
 

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