Suppliers: Tesla Model 3 Production Increasing

[03DSG]

Tesla Model 3 production is increasing to 5,000 units per week, say suppliers

 

[Rockster]

This is great news! As the article states, there's still some question of how long it will take for supplier orders of 5x/week to translate into production rates of 5k/week. The fact that airplanes are involved suggests that the lag will not be excessive.

 

[Cosmacelf]

As usual, Tesla is doing everything it can to hit production targets. Presumably, they fixed their production bottleneck, and rather than wait a month for cheaper sea shipping, they opted to pay for expensive air shipping for parts. Most companies would have saved the money and waited the month.

 

[SlicedBr3ad]

Did anyone else read the article and thought, of wow, Tesla actually on track to fill their prior estimate of 3k cars/week. 5k/week is just icing.

 

[run-the-joules]

Did anyone else read the article and thought, of wow, Tesla actually on track to fill their prior estimate of 3k cars/week. 5k/week is just icing.

I'm not holding my breath…

 

[gavine]

I saw a Model 3 at the Devon PA service center yesterday in the delivery bay waiting for its owner. DS said it was the 3rd one to come-through there so far. I didn't think many were being delivered outside of California so i was surprised to see it and, yes, it looks way better in-person than in pictures as many have said before.

 

[ItsNotAboutTheMoney]

As usual, Tesla is doing everything it can to hit production targets. Presumably, they fixed their production bottleneck, and rather than wait a month for cheaper sea shipping, they opted to pay for expensive air shipping for parts. Most companies would have saved the money and waited the month.

Or, they really, really, really need to ramp as fast as possible and want to make sure that it isn't held up by getting parts from suppliers.

 

[Cosmacelf]

Or, they really, really, really need to ramp as fast as possible and want to make sure that it isn't held up by getting parts from suppliers.

I don’t think a month here or there is going to affect them that much unless they are close to running out of cash, which you can never exclude as a possibility for Tesla

 

[macpacheco]

I don’t think a month here or there is going to affect them that much unless they are close to running out of cash, which you can never exclude as a possibility for Tesla

Delivery of 5000k M3s as being offered today = nearly US$ 300 million
That's US$ 3.6 billion in a quarter or $ 14.4 billion a year in revenue. Even adjusting for $50k/car, that's still $ 12.5 billion a year, easily doubling Tesla's annual revenue.
Tesla isn't running out of cash. It has spent a boatload of money tooling for M3 production, which I'm sure has been carefully modeled by Tesla's CFO and his team, with key decision points based on cash reserve status.
Tesla IS keeping an aggressive growth schedule, which requires lots of cash. I wouldn't be surprise if Tesla could be profitable even with 5k cars/week while keeping tooling schedule for 10k cars/week while not achieving such production levels.
After all the MS/MX production line is profitable, and will be even more profitable after they switch battery packs to use 2X70 cells and packs built at the GF.
Tesla running out of cash requires a lot of grave errors. And lets not forget how much cash Tesla could make by issuing more stock, even if TSLA drops by 50% before they dilute shares.
In practice its a one in a million chance.
The shorts will get increasingly desperate over the next 6 months and the stock should get a nice pop again.

 

[ccutrer]

Delivery of 5000k M3s as being offered today = nearly US$ 300 million
That's US$ 3.6 billion in a quarter or $ 14.4 billion a year in revenue. Even adjusting for $50k/car, that's still $ 12.5 billion a year, easily doubling Tesla's annual revenue.
Tesla isn't running out of cash. It has spent a boatload of money tooling for M3 production, which I'm sure has been carefully modeled by Tesla's CFO and his team, with key decision points based on cash reserve status.
Tesla IS keeping an aggressive growth schedule, which requires lots of cash. I wouldn't be surprise if Tesla could be profitable even with 5k cars/week while keeping tooling schedule for 10k cars/week while not achieving such production levels.
After all the MS/MX production line is profitable, and will be even more profitable after they switch battery packs to use 2X70 cells and packs built at the GF.
Tesla running out of cash requires a lot of grave errors. And lets not forget how much cash Tesla could make by issuing more stock, even if TSLA drops by 50% before they dilute shares.
In practice its a one in a million chance.
The shorts will get increasingly desperate over the next 6 months and the stock should get a nice pop again.

5,000k? It'll take them a long time to deliver that many.

I know, I know. I'm sorry. I'm OCD. The rest of your post is spot on on units and calculations, consistent with 5,000, or 5k cars.

 

[macpacheco]

5,000k? It'll take them a long time to deliver that many.

I know, I know. I'm sorry. I'm OCD. The rest of your post is spot on on units and calculations, consistent with 5,000, or 5k cars.

Only if you assume Tesla haven't been prepping everything else for higher production runs, while the GF bottleneck is fixed.
Things can be run in parallel.
For instance, instead of running the M3 production line slowly as packs arrive from GF, store enough parts for a single day run at full throttle and test the entire assembly line for one day, then shift workers back to MS/MX lines (or leave them home).
Or run the assembly line at full throttle for a single shift.
If the assembly line can do it, then the issue is parts.
And then there's delivery, the paint shop.
Those things can be unit tested.
I actually think 5k cars/week is likely to happen late in Q1'18, but Tesla might already be at 250 cars/wk and going to make 500 cars next week and increasing that by over 25-30% every week.
None of that is easy. Its hard. But that's why Musk is at the Helm and he has lots of very sharp people in charge of each piece of the puzzle.

I think the true reason Tesla has ordered for 5k cars/week is precisely to test if every supplier is ready for prime time. Its likely Tesla will temporarily have to store parts for 10-20k M3s until all suppliers are delivering as expected.

 

[ccutrer]

Only if you assume Tesla haven't been prepping everything else for higher production runs, while the GF bottleneck is fixed.
Things can be run in parallel.
For instance, instead of running the M3 production line slowly as packs arrive from GF, store enough parts for a single day run at full throttle and test the entire assembly line for one day, then shift workers back to MS/MX lines (or leave them home).
Or run the assembly line at full throttle for a single shift.
If the assembly line can do it, then the issue is parts.
And then there's delivery, the paint shop.
Those things can be unit tested.
I actually think 5k cars/week is likely to happen late in Q1'18, but Tesla might already be at 250 cars/wk and going to make 500 cars next week and increasing that by over 25-30% every week.
None of that is easy. Its hard. But that's why Musk is at the Helm and he has lots of very sharp people in charge of each piece of the puzzle.

I think the true reason Tesla has ordered for 5k cars/week is precisely to test if every supplier is ready for prime time. Its likely Tesla will temporarily have to store parts for 10-20k M3s until all suppliers are delivering as expected.

Read it again. 5,000k = 5 million