Timeline of Master Plan II

[tlo]

I'd like to share some of my thoughts on the SMP2. This is not really new info to this forum, but I'm interested to hear what others think.

In short:
TL;DR The first set of major milestones of the SMP2 will occur sooner than people realize in around the 2018 timeframe. Particularly noteworthy is the fact that Tesla is on the verge of being the first to achieve full autonomy and will do it at scale, and the implications of this are quite huge.

Well, I think the Model 3 is overwhelmingly our focus.

So, the focus really is on Model 3 and followed by full autonomy as – well it's our two priorities.

The four parts of SMP2 are:
1. Integrated solar-storage product
2. Expand EV product lines
3. Autonomy
4. Sharing

With the exception of #4, which is relatively distant and would obviously occur after #3, the other three parts are well in progress.

Based on parsing recent quotes from Tesla, this is my educated guesstimate timeline for #1-3:

1. Integrated solar-storage product
Q4 2016: SCTY acquisition complete, unveil of integrated solar-storage product and new solar roof product
2017: “meaningful” deliveries of integrated solar-storage product, positive cash flow and gross margin contribution expected
2018: Factories at full capacity, solar-storage product delivered at high volume
2019+: Continued exponential growth

- It is clear from recent comments that the solar-storage product has already been developed. This is part of what prompted the SCTY acquisition. The solar-storage product will be launched regardless of whether the acquisition occurs, but as Elon said it would be awkward if the acquisition does not go through (unlikely at this point).

Sources:

Create a smoothly integrated and beautiful solar-roof-with-battery product that just works

Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.

We anticipate two new product releases in the second half of the year that we expect to meaningfully impact MW installed in 2017. These include (1) a new, integrated solar and storage offering and (2) a new solar product focused on the 5 million new roofs installed each year in the U.S.

2. Expand EV product lines
Q4 2017: First Model 3’s delivered
2018: Model 3 delivered at high volume, Model Y unveiled
2019: First Model Y’s delivered
2020: Model Y delivered at high volume

- Model Y timeline is pure guess, but could even be conservative given that development should be pretty far along at this point. However, I don't see the need to unveil Model Y before Model 3 production is underway, hence 2018 unveil and then deliveries 1 year after that
- Between now and 2020, the Tesla pickup truck, Tesla Semi and Tesla Minibus will likely be unveiled and perhaps even launched. However, I have excluded them as they are not on the current critical path.

Sources:

Yeah. I mean, also to be clear like the priority vehicle development after the Model 3 would be the Model Y, I guess, the compact SUV, because that's also a car that where we expect to see demand in the 500,000 to 1,000,000 unit per year level. So it's the obvious priority after the Model 3.

3. Autonomy
Q2 2017: Model S & X shipped with full autopilot hardware
Q4 2017: Model 3 shipped with full autopilot hardware
2018: Tesla cars capable of Level 3 autonomy, blows people's minds
2019: Tesla cars capable of Level 4 autonomy, with regulation restrictions

- This is the most interesting part. With Model 3 design "pencils down" last month and Elon saying we are less than two years from complete autonomy (see below), I don't think there is any chance that Model 3 ships without new autopilot hardware. Tesla is not going to want hundreds of thousands of Model 3s on the road without full autopilot capability if autopilot is just around the corner.
- Elon has also said that new features will come first to Model S & X, so it only makes sense that full autopilot hardware will arrive on S & X first, in Q2 2017 the latest, before the Model 3 internal deadline of July 1, 2017
- If we take Elon at his word, full L4 autonomy will occur in 2018. Even being conservative, L3 autonomy should be doable in 2018, a full year after full autopilot hardware is shipped.
- The implications are HUGE. Not only will Tesla be the first to achieve full autonomy, by the time government regulations allow fully autonomous cars, Tesla would have hundreds of thousands of cars on the road capable of full autonomy. This also drives unlimited demand of Tesla vehicles. I don't think this is priced into TSLA stock at all.

Sources:

I think we are less than two years away from complete autonomy – safer than humans – regulations should take at least another year.

Full autonomy is really a software limitation. The hardware exists to create full autonomy. So it’s really about developing advanced narrow AI for the car to operate on.

Conclusion:
1. A lot of Tesla's current plans are aligned at the 2018 timeframe, with Tesla's factories operating at capacity and multiple product lines (Model S/X/3, solar-storage) generating significant positive cash. I feel like 2018 will be the tipping point when an early majority will accept Tesla's vision to be highly achievable and not just a dream.
2. Tesla will be the first company to achieve full autonomy, with the capable hardware available on every new Tesla vehicle as soon as the coming months.

What a time to be a TSLA shareholder...

 

[EinSV]

@tlo

This is a great summary.

Two additions/tweaks IMO:

(1). Elon said the unveil of Tesla Semi and Tesla Minibus (or whatever they will call it) will be next year. I don't know when they will start production but it seems to me one possibility is that the timeline for the Model Y will be faster than you suggest, with Y production beginning in late 2018, and Tesla Semi, Minibus and Pickup rolling out in 2019ish.

(2) Ramp of Powerwall and Powerpack (or other commercial/utility scale storage products). Tesla is likely to begin significant production of storage products in 1st half of 2017.

Definitely going to be an interesting couple of years!

 

[Drivin]

I'd like to share some of my thoughts on the SMP2. This is not really new info to this forum, but I'm interested to hear what others think.

In short:
TL;DR The first set of major milestones of the SMP2 will occur sooner than people realize in around the 2018 timeframe. .

Well that would be good especially since they haven't even finished Step 2 of SMP1: "Use that money to build an affordable car"

Although the 3 is priced above what an average new car sells for, with the taxpayer payments to buyers it is an "affordable car".

 

[tlo]

(1). Elon said the unveil of Tesla Semi and Tesla Minibus (or whatever they will call it) will be next year. I don't know when they will start production but it seems to me one possibility is that the timeline for the Model Y will be faster than you suggest, with Y production beginning in late 2018, and Tesla Semi, Minibus and Pickup rolling out in 2019ish.

Yea, I think the Model Y may arrive sooner, too. It's just hard to imagine Tesla executing so well after their production woes in the past few years. Personally, I'd be happy with them getting close to full Model 3 production by end of 2018 (delivering 200-300K), then delivering 500K in 2019, and then ramping Model Y in 2020.

Another thought I have is that Tesla is likely going to hold back on unveiling Model Y because they can't meet demand for Model 3, so it doesn't make sense to unveil a similar car that creates even more demand. However, Tesla Semi and Minibus are very different and experimental projects. So I see a possibility of those projects being unveiled and launched in pilot phase sooner than the Model Y so that Tesla can learn and collect data before scaling those projects.

(2) Ramp of Powerwall and Powerpack (or other commercial/utility scale storage products). Tesla is likely to begin significant production of storage products in 1st half of 2017.

Good point.

The Powerwall product I think is going to be rolled into the solar-storage offering, and the timeline for that to fully ramp is mid-2017 or later because that is when the Riverbend facility will be at full capacity.

The Powerpack may ramp quicker the solar-storage offering does in the short term. I think the reason the Powerpack itself is not included in SMP2 is because ultimately, the purpose of stationary storage (from the perspective of Tesla's mission) is to make renewable energy viable. So I think we are going to see Tesla make stationary storage more and more tightly bundled with solar.

 

[SW2Fiddler]

3. Autonomy
4. Sharing
With the exception of #4, which is relatively distant and would obviously occur after #3,

Not obvious to me, I rideshared my Classic S85 and it was fun and profitable after tax deductions. It was just a bit silly working the Uber app on the phone with that huge nav screen separately controlled. And insurance concerns led me to hang it up after a while...

A ride-share coup for Tesla does not depend on autonomy. It requires only integrating a rideshare app into the touchscreen, and a car that isn't $80,000. Willing driver-owners will proliferate.

 

[EinSV]

Yea, I think the Model Y may arrive sooner, too. It's just hard to imagine Tesla executing so well after their production woes in the past few years. Personally, I'd be happy with them getting close to full Model 3 production by end of 2018 (delivering 200-300K), then delivering 500K in 2019, and then ramping Model Y in 2020.

Another thought I have is that Tesla is likely going to hold back on unveiling Model Y because they can't meet demand for Model 3, so it doesn't make sense to unveil a similar car that creates even more demand. However, Tesla Semi and Minibus are very different and experimental projects. So I see a possibility of those projects being unveiled and launched in pilot phase sooner than the Model Y so that Tesla can learn and collect data before scaling those projects.

The Model S roll-out was essentially on time (once Tesla had the Fremont factory lined up and IPO'd) and Tesla exceeded its initial 20,000 production estimate by the end of the first full production year (2013). Call me an optimist but I tend to think that is a better barometer for the Model 3 launch than the Model X rollout. We will find out soon enough.

In terms of the timing of the Y introduction it is all speculative but I can envision a scenario where Model 3 production starts in Q4 2017 and the initial Model production ramp is complete within the next six months. At that point the timing for the Y production depends largely on how far along they are in Model Y development -- clearly the basic design will be done, but not sure how much validation, fine tuning will still be left on the vehicle and production process. I assume the production ramp will be simplified to some extent by sharing the Model 3 platform and many components, ala the Audi A4/Q5, which should help some.

I can see the logic of accelerating the Tesla Semi and Minibus for the reasons you mention, but the low hanging fruit is the Model Y so I expect that Elon will make that the first priority after the 3 as he suggested in the recent earnings call. Given the level of demand for the 3, they are probably not too worried about diverting Model 3 orders to the Y. If that's the case, the main timing issues will be raising cash for the production ramp from vehicle sales and TE and perhaps a small cap raise, and then making sure that Model 3 is far enough along that resources can be refocused on Y production without hampering the introduction of the 3.

The Powerwall product I think is going to be rolled into the solar-storage offering, and the timeline for that to fully ramp is mid-2017 or later because that is when the Riverbend facility will be at full capacity.

The Powerpack may ramp quicker the solar-storage offering does in the short term. I think the reason the Powerpack itself is not included in SMP2 is because ultimately, the purpose of stationary storage (from the perspective of Tesla's mission) is to make renewable energy viable. So I think we are going to see Tesla make stationary storage more and more tightly bundled with solar.

I agree that integrated storage/solar seems to be the priority. I also agree that this could result in delays in Powerwall production ramping up, although my hope is that with the GF coming on line later this year Tesla will start shipping stand-alone storage products in volume sooner rather than later, without waiting for development of the integrated solar/storage product. Tesla bringing inverters in-house is a great development long-term but also could result in some short-term issues as SolarEdge may not be overly cooperative in providing Powerwall inverters given that Tesla apparently plans to phase them out.

On the last call JB did mention that Tesla may get into grid services which suggests it will still be developing large scale storage products that are not directly integrated with solar. These would support the Tesla mission by smoothing out the availability of solar-produced power provided to the grid, which makes solar a more desirable power source. But the details of Tesla's plans for Powerpack or other large scale storage products are not clear to me at this point.