When you read through the announcement and you realize that this is a company that even if it doubled it's current production rate it would still have orders for the close to a year's production, then you have got to pause and be amazed.
How many Model 3s could Tesla produce at its current facilities? 7,000? 10,000? 15,000? It wouldn't be enough to remotely satisfy the demand.
Truth is that once delivery picks up, more people will start to order since currently people like me think it's pointless to order a car that you would have to wait a year to get and that - in most parts of the world - you can actually not order yet. The orders are likely to increase proportionate to the production capacity as Model 3 will be made available around the world.
This company could build 3 Giga Factories around the world that each produce 10,000 Model 3s per week and demand would still not be met. Heck, they could have 10 Giga Factories and they might still not satisfy demand for Model 3.
And then there is the future demand for Model Y and - once they get economy of scale and battery prices go down a bit - demand for cheaper, smaller cars.
All this demand could be met by other car manufacturers if they too produced long range EVs of similar or better quality than combustion engine cars. But no-one does and no-one will for an other year. Don't say Nissan Leaf; it's not long range. And when they finally do, in 2-3 years or so, are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW, Ford, General Motors, Hyundai, Fiat, Toyota or Mazda or are you just gonna stick with Tesla, which by then comes with even better specs than today?
Tesla is the Apple of the car world. There is still room for other producers to make the Android cars that spend 3-4 year playing the catch up game of being one-two models behind in specs, and then maybe finally catch up in 5-10 years. But Tesla will get the better customers and the fat margins if the traditionalists don't hurry. And hurry a lot.
>7,000? 10,000? 15,000? It wouldn't be enough to remotely satisfy the demand.
Honest question: where on earth do you get this idea? You actually think there is global demand for ~800,000 vehicles with an ASP of ~$55k USD?
What are you basing this insane demand off of? Tesla won't even report the current backlog numbers. If they were increasing, you don't think they'd be boasting about it?
Where does the unlimited demand come from?
>And when they finally do, in 2-3 years or so, are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW, Ford, General Motors, Hyundai, Fiat, Toyota or Mazda or are you just gonna stick with Tesla, which by then comes with even better specs than today?
Wait, you're saying you're not going to trust manufacturers that have been building and servicing millions and millions and millions of cars for, some of them, over 100 years, but instead you will trust Tesla who hasn't even proven they can sustainably build and service the few hundred thousand they've got on the road? Aren't EVs supposed to be simpler than ICEs?
Tesla won't even report the current backlog numbers.
They say it right in the OP:
"The remaining net Model 3 reservations count at the end of Q2 still stood at roughly 420,000 even though we have now delivered 28,386 Model 3 vehicles to date."
More than 70M cars are produced worldwide every year. The 3 large German producers, Mercedes, Audi and BMW, are producing around 6M cars, of which many are priced similarly or more expensive than Model 3. That's just to mention some of the larger ones.
There is easily a demand for millions of cars within the upper end of the mid price segment like Model 3, and once the price of batteries goes down just a bit, EVs can reach the lower end of the mid segment.
We are not at the cheap segment yet, but it's just a matter of battery prices going down (through economy of scale; we actually don't need any breakthroughs in technology).
Then factor in charging networks. Right now, I don't have any supercharger near me. Next year I will. In 4-5 years I will have plenty.
As for not trusting the traditional manufacturers, I stopped buying Nokia and Ericsson and never came back, ones Apple marketed the iPhone. Not because they had had bad products or weren't trustworthy anymore. Just because it was obvious they produced the old tech and were behind on the new. People stopped buying horses and carriages when Ford produced his cars. Horses served us well for millennia.
And the hundreds of thousands of Teslas already driving billions of miles on the road are still driving well without the engines and expertise of BMW, right? People trust Tesla's tech now.
> Mercedes, Audi and BMW, are producing around 6M cars, of which many are priced similarly or more expensive than Model 3
~$55k USD would be roughly equivalent to a 5 Series/E Class/A6. Combined, about 300,000 of these cars are sold per year in Europe. So to sell 800,000 Model 3s worldwide you've got to replace every single one of those BMW/Merc/Audi sales, and then some.
Those are just European figures, just 3 brands, and just the existing numbers.
In 2006, the market for smart phones was tiny. A couple of years later, people paid 3 times more for a phone than they ever thought they would.
Yes, $500 for a phone is not the same as $50,000 for a car. But who would have thought that people would readily shed out $599 for a cell phone before Apple made that market? The amount of people able to pay $50,000 for a car is increasing every year due to the economic growth in Asia and elsewhere and Tesla expands the market of people interested in expensive cars in Europe and America beyond the usual motor enthusiasts to people like me.
The palm pilot had been around and popular for 10 years when the iPhone came out, at a 300+ dollar price point.
That and most people don't actually pay anything for their phones, they get them on contract (in the us). As far as I know in Europe, smart phones are less common among poorer communities.
And an iPhone provides more reason utility over a palm pilot than a model three does over a used Toyota that costs 1/5 as much.
Tesla has a history of build quality issues that are forgivable by early adopters but still represent significant barriers to wide-scale adoption. I think the incumbent automakers can match what Tesla’s doing before Tesla can develop the manufacturing chops to fully compete.
Remember that before iPhone launched, Apple was already a leader in handheld consumer electronics with the iPod, with a level of operational expertise that more than matched any competitor. Not to mention lots and lots and lots of cash and time to spend on solving the hard problems before they had to launch. All luxuries that Tesla lacks.
The sibling comment from codeulike points out that they clearly stated the very thing you spent so many words questioning (in that time a quick skim of their report would've saved you all that trouble). Have you never heard a story of how a new entrant might be able to do better than the status quo? There's a lot going on here, and these stories are not so simple. Yes, in many ways EVs are simpler. There are stories of Elon Musk micromanaging to a fault, so maybe another CEO would've gotten them producing quicker with fewer issues. However, perhaps that other CEO wouldn't have gone up against the other manufacturers in the first place. I'm not defending either type of car maker, but there are countless stories of new players figuring out how they too can play, and they often find out how to do it better even if they make a lot of mistakes along the way.
>All this demand could be met by other car manufacturers if they too produced long range EVs of similar or better quality than combustion engine cars. But no-one does and no-one will for an other year. Don't say Nissan Leaf; it's not long range
For comparison, the Renault Zoe and Chevrolet Bolt EV have a higher range than the standard Model 3. Both of them have also sold more than the Model 3 so far and have a lower price. These cars are in a different class than the Model 3, but it seems that traditional manufacturers won't have any trouble producing long range electric cars.
The standard model 3 that you refer to, which has a range of 350 km can barely be considered a long range EV, and it is actually not being produced yet. Tesla has only produced the more expensive version with a 510 km range.
Renault Zoe has a range of 240 km
Chevrolet Bolt has a range of 380 km.
So none of them compares to the Model 3 actually produced.
So none of them compares to the Model 3 actually produced.
Of course they don't, 'cause the Model 3s actually produced are friggin' expensive. That screeching sound y'all hear right now? That's the goal posts being dragged another 10 yards back.
Renault Zoe has a 400 km range model for €23,600 (in France). They compare to Model 3 in some aspects and not in others. I can of course claim that Tesla doesn't have any experience in producing affordable electric cars.
> are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW
I love what you said and the enthusiasm that goes with it. Yes. Tesla are showing the way.
But if you're an investor you might buy shares in some of the other manufacturers, they will also benefit from an electric shift and their shares are considerable cheaper.
I believe OP was referring to how current gen smartphones were at least a few years “behind” (in terms of underlying tech and software) when the iPhone first came out, leaving the rest of the industry to play a catch-up game.
The only thing that holds Tesla down is whether they can scale production fast enough not to let others in. Forget about finance by now. They are not going bankrupt.
Production cycles in cars are at least 3 years. So the traditional manufacturers that more or all have announced they will market a competitive EV in 2019-2020, will get a second try in 2022-2023. I talk about their second try because it's unlikely that they will produce truly competitive EVs next year in their first try. Range and price are the main factors, and the range they talk about is generally 350-450 km, so a bit less than the Model 3 currently being produced, which have a range of 510 km. Tesla has historically upgraded their models with better batteries so it's a good bet that in 1-2 years Model 3 will have even better range. And the ones that they talk about now that have a range comparable to Model 3 are generally priced more like Model S or Y, so for a much smaller market.
In other words, I expect the old car manufacturers to market truly compatible EVs in 3-4-5 years. If Tesla can double it's production of Model 3 and other medium or low priced cars every year Tesla can produce
10k weekly mid 2019
20k weekly mid 2020
40k weekly mid 2021
80k weekly mid 2022
Needless to say that if that were to happen, and they produce 4 million EVs yearly in 4 years, it would be very hard for most of the others to get any footing in the market.
Maybe Tesla could achieve that by simply copying the existing production lines at the current Giga Factory or somewhere else in the world. We think that they would have to build huge factories which in itself takes time, and that they would have to innovate and automate much more than now but maybe part of the production could be achieved by adding more tents and hiring more people. Do we know?
No, I was referring to Multi-Touch, which was new in smartphones at the time. Most popular smartphones had either keyboards or styli as an input method.
It's an interesting paradox, where the iPhone introduced new features while not being at feature parity with existing players. Apple's innovations have often been around expectations instead of technology, and much the same is true of Tesla.
I think this is an absurd simplification of things. Apple is all about the integration of top notch tech into a product that the market really wants. Take the iPhone’s touchscreen for example or the mini HDDs in the first iPods.
truth is that the backlog of demand will evaporate within months when alternaties, better priced and more dependable, begin arriving : Volvo, VW, BMW, Mercedes, Jaguar, Chevy of course,...
How many Model 3s could Tesla produce at its current facilities? 7,000? 10,000? 15,000? It wouldn't be enough to remotely satisfy the demand.
Truth is that once delivery picks up, more people will start to order since currently people like me think it's pointless to order a car that you would have to wait a year to get and that - in most parts of the world - you can actually not order yet. The orders are likely to increase proportionate to the production capacity as Model 3 will be made available around the world.
This company could build 3 Giga Factories around the world that each produce 10,000 Model 3s per week and demand would still not be met. Heck, they could have 10 Giga Factories and they might still not satisfy demand for Model 3.
And then there is the future demand for Model Y and - once they get economy of scale and battery prices go down a bit - demand for cheaper, smaller cars.
All this demand could be met by other car manufacturers if they too produced long range EVs of similar or better quality than combustion engine cars. But no-one does and no-one will for an other year. Don't say Nissan Leaf; it's not long range. And when they finally do, in 2-3 years or so, are you going to take a chance on one of the first competitive EVs from VW, Mercedes, BMW, Ford, General Motors, Hyundai, Fiat, Toyota or Mazda or are you just gonna stick with Tesla, which by then comes with even better specs than today?
Tesla is the Apple of the car world. There is still room for other producers to make the Android cars that spend 3-4 year playing the catch up game of being one-two models behind in specs, and then maybe finally catch up in 5-10 years. But Tesla will get the better customers and the fat margins if the traditionalists don't hurry. And hurry a lot.