
Tesla's Model 3 volume production target pushed back again - joering2
https://www.reuters.com/article/us-tesla-production/tesla-delivers-1550-model-3s-in-fourth-quarter-idUSKBN1ES1Z4
======
Animats
Most auto final assembly lines build about a car a minute. Running two shifts,
5,000 cars a week is about normal. If the line is running much below a car a
minute, or is stopping much, something is very wrong.

It's not a fundamental problem. It's Musk trying to put an assembly line into
service too fast. An assembly line is a custom-built machine about a thousand
feet long. They take time to debug, and people who've done it before. Usually,
most of the debugging takes place off-line in supplier factories before the
final line is assembled in place. Tesla skipped that step to save time.

Doing it that way is insanely expensive. The operating costs are roughly
constant regardless of the number of cars that come out, so debugging while
producing means a huge cost per car.

~~~
rconti
Likely it was his only option. Delaying shipping the car by 6 or 12 months
(arbitrarily-chosen numbers) was simply a non-starter for, I'm sure, cashflow
reasons.

Even if this means it takes 2-3x as long to get up to full production rate,
from an investor standpoint, this was likely a necessary evil.

~~~
melling
Tesla only shipped 260 Model 3’s in Q3. Now they’re approaching 1000 cars a
week.

[http://h4labs.org/tesla-is-approaching-1000-model-3s-a-
week/](http://h4labs.org/tesla-is-approaching-1000-model-3s-a-week/)

~~~
dhzjxnbzn
Cars produced in the last seven days of the quarter is a somewhat gamable
metric. They may or may not be sustaining production at that rate.

~~~
Animats
The good numbers come from DMV registrations. There are industry sources which
collect that data weekly.[1]

[1] [https://hedgescompany.com/automotive-market-research-
statist...](https://hedgescompany.com/automotive-market-research-
statistics/auto-mailing-lists-and-marketing)

------
drewcon
This article caused me to become very bearish on Tesla.

[https://dailykanban.com/2017/12/go-production-hell-went-
prod...](https://dailykanban.com/2017/12/go-production-hell-went-production-
heaven/)

Not on EVs in general, but just on their ability to actually outpace
delivering the market (without killing anyone) before the old guard caught on
and gets there first. Not a novel thought, but the factory analysis really put
the nail in the coffin for me.

~~~
mmanfrin
I've come to see Tesla as being _very bad_ at production lines. I've heard
almost nothing but bad news about working conditions, safety, output, etc. Top
it off with the massive firings that happened right as the Model 3 production
was set to ramp up.

However, I'm bullish, because these are _solved problems_ that many other
people have expertise in. It's easier for Tesla to find someone skilled in car
manufacturing than it is for other manufacturers to build the brand demand
that Tesla has. They have solved the hard problem, but failed the easy. And
when they figure out how to build cars faster, the demand is there to meet
them, which means that when they solve that easy problem, they will be sitting
pretty.

~~~
Tiktaalik
> However, I'm bullish, because these are solved problems that many other
> people have expertise in.

All of Teslas woes make me bullish on companies like Toyota and GM that
understand how to build cars.

I'm increasingly questioning whether the electric drive train and the
batteries are actual difficult and novel part about building an electric car.

I think it's going to be easier for GM to find people that can build good
electric engines than it is for Tesla to get upto speed on how to build their
cars at GM scales.

~~~
danhak
Why, in your opinion, is GM’s Chevy Bolt still being outsold by the Tesla
Model S?

Also FYI “electric engines” are not a thing.

~~~
Sohcahtoa82
I'd say it's a failure of GM's marketing department and dealership salesmen
that for some reason steer (no pun intended) people to ICEs.

GM should be capitalizing on Tesla's failure to bring the Model 3 out. They
could absolutely sell the message of "Why wait 18 months for an affordable
electric car when you can drive one TODAY?"

They could devour Model 3 reservations, but for some reason are choosing not
to.

~~~
femto113
Unlike Tesla, GM doesn't own its dealerships. Each dealership tries to
optimize their selection for their own profit, each salesperson to optimize
their sales for their own income. There's a complicated web of incentives
tweaking which models are best for which entity at which time, but as a
general rule if they are relatively inexpensive to manufacture and/or there
are lots of them in inventory that's what they want to sell you. Trucks and
those SUVs built on truck frames are always at the top of the list (Ford's
F-150 is rumored to be the most profitable vehicle ever built, I think the
Escalade is among GM's most profitable vehicle). If someone can create a cheap
to build electric truck it might well grab the interest of dealers and
salespeople, but they're never going to be excited to sell you a hard to
build, low-margin family sedan regardless of powertrain.

------
Cshelton

      "In the last seven working days of the quarter, we made 793 Model 3's, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3's per week" - from Tesla's release. 
    

Also another 860 Model's in transit currently that will count in Q1. It's
getting there.

~~~
aidenn0
so they almost hit 20% of their goal from 6 months ago?

~~~
melling
“Tesla said it now plans to reach its goal of 5,000 vehicles per week by the
end of the second quarter”

And it’ll be another 6 months before they get to 5k/week. They have 500,000
pre-orders. it’s going to take between 2-3 years to deliver.

Personally, I’ll take 1,000 Model 3’a a week. It’s a great improvement.

~~~
aidenn0
Haven't they moved that goal back 1 quarter every quarter so far?

------
selectout
Tesla essentially went from test production in Q3 to matching Model S/X weekly
production by the end of Q4.

While they are still ~6 months behind schedule, the way they are able to kick
off an entirely new line is still impressive in it's own regard.

Remember, Elon Standard Time.

------
_ph_
One has to add the over 800 Model 3 which were made, but not delivered to the
customers yet. So they made about 2300 Model 3 in Q4. And Tesla claims to be
hitting a rate of 1000/week in the last days of 2017. So the production speed
is picking up for sure. Not as fast as promised, but it is picking up, and
probably will continue to rise significantly across Q1.

~~~
dx034
But why weren't they delivered? Because they couldn't ship them fast enough or
because the cars aren't finished yet?

~~~
_ph_
Because they were made in the last week of the year, and it takes a couple of
days to ship them to the destination service center which has to make an
appointment with the new owners to do the delivery and finish the paper work.
Tesla counts a car as deliverd only when the new owner has taken posession of
the car. So Tesla always has quite a few cars in transit - about 2000 S/X and
the end of Q4 and over 800 M3. Deliveries to the east coast and of course
Europe take accordingly longer.

------
rweba
I understand that people are reacting to the "missed expectations", but the
reality is that everyone knew that their original production goals were very
aggressive.

Here's the bottom line: If Tesla originally planned to produce 250,000 Model
3s in 2018 (5,000 per week * 50 weeks) and only ends up producing 150,000
(1,000 per week for 6 months + 5,000 per week for 6 months) I don't think
that's going to be a problem in the long run.

Their only real competitor right now is the Chevy Bolt.

The Bolt has similar range and price to the Model 3 but it has at least 2
disadvantages:

(1) GM is not really aggressively pushing the Bolt, allegedly because it is
selling them at a loss

(2) Tesla has the super charger network.

Conclusion: These delays don't like they will have any long term impact.

~~~
dx034
Their constraint is not competition but cash. They already have a lot of debt.
If they cannot ramp up production as forecast, future cash injections could be
hard to get.

------
ironchief
@Tweetermeyer

TESLA TOTAL PRODUCTION BY QUARTER

Q32016: 25,185

Q42016: 24,882

Q12017: 25,418

Q22017: 25,708

Q32017: 25,336

Q42017: 24,565

Anyone else noticing a pattern here?

[https://twitter.com/Tweetermeyer/status/948682235892264960](https://twitter.com/Tweetermeyer/status/948682235892264960)

------
gozur88
I'm amazed the extent to which investors are willing to shrug off this kind of
news when it comes to Tesla.

------
slg
Missing production targets is obviously bad, but after giving this
announcement more thought it doesn't seem like awful news if you put this in
context with other EVs rather than Musk's always overambitious projections.

Tesla says they are producing Model 3s at roughly 1000 per week now.
Considering they are selling Model 3s as soon as they can build them, that
would make the Model 3 already the 2nd best selling EV. The top seller is the
Model S at a little less than 1,200 per week. The way production is currently
ramping up the Model 3 will become the best selling EV sometime in mid January
to early February. That isn't as fast as people wanted, but I don't see how
this would be a sign of some overall failure with long term side effects
rather than a temporary stumbling block as they ramp up production.

If I was a long term investor of Tesla, I don't think this would have me
worried and I might even try to pick up some extra shares tomorrow at a
discount.

------
simonsarris
Maybe its just because I've been holding TSLA for years, but it all feels so
short sighted when people panic and doom-say about stuff like this.

People have totally forgotten how the Model X ramp up went (badly[1]). This is
nothing by comparison. In a couple years people won't remember that
predictions were off yet-again by 6 months. They'll be driving electric cars
instead.

[1] Mostly due to overly complex components like the doors, but still, the X
ramp up was abysmal, and everyone has _mostly forgotten about it._ Consider
that your foreshadowing. I'm certainly glad I didn't sell.

------
flunhat
How long does Tesla have before it runs out of cash? I know they just had a
bond sale or something, but I'm fuzzy on the details.

~~~
hndamien
I'm going to go out on a limb and suggest that the crypto boom is going to
produce a handsome windfall for tesla.

~~~
alexanat
How do you figure that? Elon invested in BTC and ETH? :)

~~~
bottled_poe
Elon, Aka Satoshi ;-)

------
vkuruthers
Musk has painted himself into a corner. He is probably aware that skipping the
hard tool test phase was a bad idea, but had no choice, they would've run out
of money adding another 6-12 months to the model 3 timeline.

What they're probably seeing now is lots of model 3s coming off the production
line with non trivial faults (as to be expected), and stock-piling those
because they can't afford to stop the line and fix root causes. Fixing all
those stockpiled 3s will take a hell of a lot of time and $$$.

Fair chance Tesla will go into BK in the next 12 months or so if you ask me..

~~~
Robotbeat
Bankruptcy? Doubt it. They didn't go bankrupt in 2008 when they had not much
more than a few prototypes (that overheated), some gliders, and an idea.

Tesla has been here before and worse.

~~~
dx034
They had $21.9bn liabilities in Q3 2017, compared to $489m in 2011. Couldn't
find 2008 numbers but sure that debt was much lower then. Bankruptcy doesn't
just mean having low cash levels, it means not being able to serve debt in
time. That risk has increased meaningfully with increases in debt. Missing the
coupon on one of their bonds by just a few days would put them in technical
default and could trigger bankruptcy.

------
PunchTornado
Apple struggled with the production of their first iphone too. The good thing
is that you have tons of orders and market hype.

market hype. market hype -> This thing is invaluable.

~~~
melling
This isn’t Tesla’s first car. They shipped 100,000 cars last year. Must be a
problem making the battery?

~~~
olivermarks
I've heard they continue to have had big steel welding problems. Earlier cars
were composites and aluminum but ramping up production of steel cars is a very
different manufacturing technique. [http://autoweek.com/article/car-
news/tesla-might-be-missing-...](http://autoweek.com/article/car-news/tesla-
might-be-missing-spot-weld)

The rumors have been they are still using 1980's manual production line
techniques [https://www.harborfreight.com/welding/spot-
welders/240-volt-...](https://www.harborfreight.com/welding/spot-
welders/240-volt-spot-welder-61206.html)

Th

~~~
scrumbledober
Interesting to hear someone having problems welding steel instead of aluminum.
Generally Al welding is much more difficult than steel.

~~~
olivermarks
Robots seem to be better at welding aluminum than unskilled humans, they
appear to be ok with spool guns and adhering to consistent tolerances and
settings. Until now Tesla has mostly been attaching composites to aluminum
monocoques using relatively low production run specialist car building
techniques. Banging out masses of low cost cookie cutter cars is a different
dynamic involving lots of spot welds...

