The big unknown: Will gen 3 be delivered on time?

[Chickenlittle]

There are much more unknowns than knowns at this point, but given the importance of this issue to the long term viability of Tesla, and frankly, depending on the expected timeline for delivery, whether or not Tesla will continue to exist, it's at least worth a thread even at this early stage.

Recent Information - From the q4 2014 call we know:
1. The car's design will be relatively conservative.
2. 2016 will be the year they unveil the design of the car.
3. At this point they are still confident in the second half of 2017 timeline.

Any other details that might be of relevance would certainly be welcomed.

The first more important question is reception to the model X

 

[ludicrousspeed]

Revealing the car in March 2016 is not that hard. Remember they unveiled the Model X back in early February 2012, already including the gullwing doors:

Tesla Unveils Model X | Tesla Motors

Here we are 3.5 years later and the Model X still hasn't shipped (the latest rumors say it won't ship until early 2016 in meaningful volumes).

I therefore don't think a March 2016 unveil is any indication of the Model 3 actually shipping by the latest "late 2017" deadline.

I may have formatted my post incorrectly. The main point I was trying to get across is that I don't think the 3.5+ year gap between initial X reveal and deliveries will be indicative of what we can expect from M3. The Model 3 has been Musk's dream and Tesla's goal (accelerate advent of EVs) since years before Tesla even went public. The main reason why the X was delayed for so long is because of unforeseen demand for the S, which gave Tesla more time to develop the X while still meeting sales targets. I can't see a delay for M3 past Q4 2018 (at the latest) because it will hurt their sales goals this time. They simply cannot sell 200K+ vehicles per year with just the S/X because the demand for cars that expensive just wont be there.

Right now they're obviously very focused on producing and ramping up Model X, but Straubel recently said that most of their R&D STILL goes towards the M3. My best guess is that Tesla has put more human hours and development costs towards M3 at any given point since its IPO, even during intense S/X focus periods. Once the X production is ramped up and smoothened out, Tesla will focus on M3 even more than it previously did and this will speed up the eventual production process. Also, the S and X generally take more time to perfect because they're luxurious products. Musk said in the conference call that the X is the hardest car in the world to make and that one of the main supplier issues is the back-row seats, which must be very high-end to cause such an issue. The M3 will be a much simpler product with less complexity to deal with.

 

[dakh]

Personally I'm more concerned about them meeting M3 price target than simply taking too long to develop the car and the manufacturing process. What can be cut from 70D that would halve out the door price?

 

[wk057]

Personally I'm more concerned about them meeting M3 price target than simply taking too long to develop the car and the manufacturing process. What can be cut from 70D that would halve out the door price?

They could maybe ship it without a battery or motors.

 

[purplewalt]

I think an equally large problem they have is small supercharger network. To break into the mainstream, there have to be enough superchargers that the average buyer can hop into the car and drive away without concern about getting to either the destination or back to the starting point. You really can not do that today, at least not here in South Florida with the 70D. Daily driving yes, but longish weekend trips? not so much. As of now we have to take the Honda Odyssey.

With all due respect:
Exactly where are you wanting to go in Florida that you cannot get there using Superchargers?
A 70 D should be able to get you almost anywhere in Florida and back if you simply drive effectively.

If you are worried that not every corner of Florida will not be accessible for gen 3 buyers (staying on topic for this thread), that will probably be 2+ years away.
And TM will continue to fill in most of the gaps...

In short: I don't see the "small supercharger network" as being a valid concern or consideration.

 

[anticitizen13.7]

Personally I'm more concerned about them meeting M3 price target than simply taking too long to develop the car and the manufacturing process. What can be cut from 70D that would halve out the door price?

For starters, the 70D has 2 motors. A base Model 3 will probably be RWD, so that is some savings.

My guess is that most of the price target can be met through greater economies of scale and automation. Tesla's assembly lines have progressively gotten more robots. As Tesla ramps up volume, they can order more components at far lower cost per unit. The Gigafactory alone is projected to reduce battery costs by 30%.

 

[TI Sailor]

The M3 will also be mostly steel rather than all aluminum per EM many months ago. Presumably that change will lower costs significantly, although I have no idea if such will be the case in 2-4 years. I don't have the quote readily available, but Google can find it I'm sure.

 

[redi]

Model 3 will be on time, and you will be able to buy a base model for $34,999. Average ASP will be about $55k if I had to guess.

Is this with or without the projected fuel savings over it's lifetime or some other period subtracted? I do not think I had read for sure how the bottom price was figured from a marketing perspective.

 

[napabill]

"Will Gen 3 be delivered on time?"

Your kidding, right?

 

[stopcrazypp]

Is this with or without the projected fuel savings over it's lifetime or some other period subtracted? I do not think I had read for sure how the bottom price was figured from a marketing perspective.

I'm pretty sure without. Elon announced the S70 at $70,000 and that is the exact price without any projected fuel savings if you go in design studio.

- - - Updated - - -

Personally I'm more concerned about them meeting M3 price target than simply taking too long to develop the car and the manufacturing process. What can be cut from 70D that would halve out the door price?

I'm going to guess use more steel, smaller battery (while also drastically cutting battery costs), smaller motor/inverters, less content inside (smaller screen, less expensive materials, etc) and drastically more volume for economy of scale.

Using the old BMW comparison, a 7 series starts at $74k and a 3 series at $33k. Current Model S volume is on par with 7 series worldwide volume. Model 3 targets 3 series volume.

 

[MitchJi]

At $125 per kWh pack cost a 60 kWh pack, which with a 20% smaller car should have the range of a 70 kWh MS, the pack will cost about $7.5. The rest of the car should cost less to build than a similarly sized ICE to build.

I believe that they will begin deliveries within 3-4 months of their announced schedule.

 

[Neo]

During a conference call Elon said they have two versions in mind for Model 3. One has a more radical design and the other a more traditional design. He said they will probably go with the traditional design and make it more like a smaller version of Model S to avoid delays. I think that's a good idea.

Because Model 3 and Gigafactory production times are tied together, I think this time they might actually start production as planned, that is, first deliveries in late 2017 and high volume production in early 2018.

 

[tftf]

It looks like both

- VP Manufacturing - Gilbert Passin (replaced with Reichow?)

- VP Engineering - Chris Porritt (replaced by Field?)

may no longer be with the company - or at least they have a different job title now.

So is Chris Porritt still at Tesla? If so, in what position/function?

According to press reports as recent as a few months ago, he was in charge of the Model 3. His departure would be significant.

But now Doug Field is "VP Engineering" according to SEC filings.

Is Doug Field in charge of the Model 3 now?

 

[AmpedRealtor]

Is he still at Tesla?

The company seems to have a tendency to announce prominent hirings, but almost never firings or people leaving (the only exception to the rule was the CFO leaving).

It looks like both

- VP Manufacturing - Gilbert Passin (replaced with Reichow?)

- VP Engineering - Chris Porritt (replaced by Field?)

may no longer be with the company, or at least have a different job title now.

Maybe someone can confirm this.

A high churn rate is never a good sign of projects staying within their original timeline. I don't think the Gen III car is out before 2018 or 2019 (as I guessed last year).


PS: The VP of sales/service, Guillen, of course also took a leave of absence until early 2016 (and the wording sounds like he maybe doesn't return at all, he also sold many shares), but he has likely little impact on the Model 3 timeline.

George Blankenship left in 2013, although he said he retired. It certainly is interesting how many senior level executives Tesla has gone through. I suppose those rumors of it being difficult to work for Elon Musk are true. And Jerome Guillen is a really great person and someone who should have been quite valuable to Tesla, given the huge impact he had on the ownership experience. The fact that he has sold a lot of his shares speaks to a lack of confidence about Tesla's future, in my opinion.

 

[dakh]

Sounds reasonable re: pricing, the only nit is steel bodied car will be heavier so chances are smaller battery won't be proportionally smaller. There are other factors involved of course so it's not as clear cut.

 

[purplewalt]

George Blankenship left in 2013, although he said he retired. It certainly is interesting how many senior level executives Tesla has gone through. I suppose those rumors of it being difficult to work for Elon Musk are true. And Jerome Guillen is a really great person and someone who should have been quite valuable to Tesla, given the huge impact he had on the ownership experience. The fact that he has sold a lot of his shares speaks to a lack of confidence about Tesla's future, in my opinion.

According to Note 1 from Form 4, Jerome exercised 1,500 vested options and sold the corresponding shares according to the trading plan that was adopted beck in February of 2015.
This was done as part of SEC 'Rule 10b5-1'.
The selling of stock that is owned by officers and directors of publicly traded corporations is on a predetermined basis set by date and quantity to avoid any conflict, to avoid accusations of insider trading and ultimately refute accusations of impropriety.

The quantity of TSLA shares which Jerome still owns -- 2,662 -- remains unchanged.

 

[tftf]

The quantity of TSLA shares which Jerome still owns....

Can be seen here: TSLA Jerome Guillen Insider Trades for Tesla Motors Inc.

He sold plenty before July 2015. Have a look at the months before.

Anyway, since this topic is about the Model 3 I mainly asked about Chris Porritt whose job title seems to have been taken over by Doug Field. He was responsible for the Model 3 as VP Engineering.

But yes, generally Tesla has an unusual rate of senior exec (see list above) and country manager churn (China of course and just today the country manager for Germany/Austria left Tesla).

That usually doesn't bode well for smooth operations and keeping deadlines. New people aren't productive from day one. A senior level transition takes months until everything is back on track.

 

[purplewalt]

Can be seen here: TSLA Jerome Guillen Insider Trades for Tesla Motors Inc.

He sold plenty before July 2015. Have a look at the months before.

I was addressing AmpedRealtor and your earlier assertion that Jerome has sold a lot of his share.
He simply exercised Options permitted under SEC rules.
His total number of TSLA shares that he owns remains unchanged.

Anyway, since this topic is about the Model 3 I mainly asked about Chris Porritt whose job title seems to have been taken over by Doug Field. He was responsible for the Model 3 as VP Engineering.

But yes, generally Tesla has an unusual rate of senior exec (see list above) and country manager churn (China of course and just today the country manager for Germany/Austria left Tesla).

That usually doesn't bode well for smooth operations and keeping deadlines. New people aren't productive from day one. A senior level transition takes months until everything is back on track.

Tesla is still a very dynamic and young company.
The organization is 5 or 6 times larger than it was two years ago.
And they are continuing to grow.
Internally people are still finding what best practices are, and who the most effective and innovative leaders are.
Keeping deadlines or rather missing deadlines might be the benchmark why some new leadership is required.

Taking nothing away from individuals, everyone's circumstances is unique.
Top management does not want to hear about the labor pains, all they want is to see is the baby.
And if that is what their expectations are, anything less than that expectation might mean some sort of re-alignment of teams and strategy how to MEET those expectations.

 

[anticitizen13.7]

The main reason why the X was delayed for so long is because of unforeseen demand for the S, which gave Tesla more time to develop the X while still meeting sales targets. I can't see a delay for M3 past Q4 2018 (at the latest) because it will hurt their sales goals this time. They simply cannot sell 200K+ vehicles per year with just the S/X because the demand for cars that expensive just wont be there.

Musk said in the conference call that the X is the hardest car in the world to make and that one of the main supplier issues is the back-row seats, which must be very high-end to cause such an issue. The M3 will be a much simpler product with less complexity to deal with.

It's also my hunch that Tesla as a whole organization felt less urgency with Model X. Model X was not part of the original "secret plan", which was Roaster -> Model S -> Model 3. The way Elon and other Tesla officials have talked about Model X has been IMO almost reverent, as if the X is the manifestation of their vision of perfection and daring. They could afford to take their time, because the company has been selling far more Model S than expected.

Model 3 is not a vehicle where Tesla can afford to take their time. Model 3 has been the entire point of Tesla's existence: to bring an EV to truly mass-market production volumes. Mass market by 2017-2018 is what investors have been expecting.

 

[Robert.]

Elon has just tweeted and said:

"achieving a long range affordable electric vehicle has always been our long-term goal. Due in late 2017!."