If A Tesla Pattern Has Emerged, What Does That Mean For Model 3?

March 3rd, 2018 by Zachary Shahan

We humans have a tendency to stare at one tree and forget about the forest, let alone the even broader world around the forest. For example, we perhaps look at our president and think it’s the end of our country, when it’s really just a 3-point drop in our level of democracy*. When it comes to the restless tech world and our various consumer product addictions, this is certainly true as well. Is Tesla immune to that? Quite the opposite.

Whether we are fans or critics, we tend to have a very short memory when it comes to Tesla. When I force myself or am somehow triggered to think back on where Tesla was 3 years ago, 5 years ago, or 8 years ago, I become a bit shocked by the “controversies,” concerns, and scaremongering around Tesla today.

Scroll back 5–6 years

The Tesla Model S was the hot kid on the block. How many articles and comments and supposed experts were out there bashing the thing for not having perfect fit & finish, for not being able to drive forever without charging, for production challenges, for low production output? Tesla wasn’t a car company, you know? That meant Tesla couldn’t produce cars, and certainly not good ones, and certainly not on a mass scale. You can read through those lines quickly, but really take a deep breath for a minute and try to put yourself back in 2012. Was the feeling much different than it is now around the Model 3? Frankly, those “concern trolls” (was that even a term back then?) had more of a point — there was considerably more risk and Tesla didn’t have a track record of being able to mass produce cars. Who the hell was this Elon kid anyway? A Silicon Valley software dude who thought he had a bright idea to start a car company?

(By the way, Elon actually won a $1 million bet with an auto journalist who had claimed the Model S couldn’t be built within the technical specifications Musk laid out before the end of 2012. Tesla started delivering the Model S to customers in June of 2012.)

Scroll back 3 years

It’s 2015 and the Model S was a great, whopping success, but the Model X was next up to plate and there was a lot of concern Tesla couldn’t repeat its success. This time, Tesla had “definitely” taken too big a bite. For sure, this vehicle was absolutely unbuildable on a mass production line. So says Bob Lutz. In late 2014, Tesla had indeed pushed back the Model X production target for something like the 4th time. It was a super hard car to mass produce. Tesla had a lot of problems with it, and those were fairly public. But remember two things: 1) A large number of experts and armchair experts said the Model X was impossible to mass produce. 2) Tesla is now mass producing the Model X.

Oh yeah, by the way, the Model S and Model X have far more consumer demand than Tesla initially expected. So, not only was Tesla able to get these vehicles to mass production (despite the certainty many experts had that Tesla couldn’t), but vehicle sales also flew past its initial consumer demand forecasts. Tesla now sells approximately 100,000 Tesla Model S and Model X vehicles per year (combined). Its initial hopes for Model S and Model X demand were shown in the table below.

For a direct word-for-word flashback to just 2½ years ago, here’s a segment of one of my articles from August 2015:

X production looks like it might present more challenges than previously anticipated, particularly due to supply chain issues. As Elon has stated a few times, you can’t ship a car if it is missing a part or two. You have to have everything lined up really well to get to mass production, and it’s hard to know what might go wrong in one thread of the blanket beforehand. In the shareholder letter, Tesla writes, “While our equipment installation and final testing of Model X is going well, there are many dependencies that could influence our Q4 production and deliveries. We are still testing the ability of many suppliers to deliver high quality production parts in quantities sufficient to meet our planned production ramp. Since production ramps rapidly late in Q4, a one-week push out of this ramp due to an issue at even a single supplier could reduce Model X production by approximately 800 units for the quarter. Furthermore, since Model S and Model X are produced on the same general assembly line, Model X production challenges could slow Model S production. Simply put, in a choice between a great product or hitting quarterly numbers, we will take the former. To build longterm value, our first priority always has been, and still is, to deliver great cars.”

As such, to be conservative, Tesla is now targeting 50,000–55,000 vehicle deliveries in 2015. (Previously, the target was ~55,000.)

While Elon noted that the Model X may be the toughest vehicle in the world to build (slight hyperbole, perhaps), it’s going to blow people away. Count me ready to be blown.

Model X launch is still set for September. Configuration should begin in 2–3 weeks, and it will be live on the website by the end of August.

Again, at the time I wrote that bullet list summarizing a quarterly Tesla report, a huge swath of Tesla analysts and pseudo analysts were claiming that the Model X was impossible to mass produce and it would be the death of Tesla. Do you remember the feeling back them? It certainly seemed stronger to me than the current concern about Model 3 production.

(By the way, in late 2015, Elon Musk said he expected eventual demand for the Model S and Model X to total 100,000 cars a year. That was essentially the total in 2017 and seemingly will be again in 2018.)

Tesla Model 3

Now, where does all of that take us with the Model 3?

Well, of course, we’re hearing almost identical claims as we heard with the Model S and Model X — sometimes even identical claims.

“Tesla can’t produce the Model 3.” (That’s certainly one we heard at high volume till mid-2017! You still hear it from time to time today, just as you heard it about the X even after the X was being produced.)

“Tesla can’t mass produce the Model 3.” (That’s the hottest at the moment.)

“Tesla never intended to sell a $35,000 Model 3 and never will.” (Ah, the old attack on Tesla’s and Elon’s morals and intentions. Elon and crew just want to get rich and scam people, eh?)

If all of these claims hadn’t been thrown around for years with the Model S and Model X, they might make many of us more concerned about the Model 3. But the multi-year pre-game show seemed to immunize many of us against this anti-Tesla hype. What is new in the attacks on Tesla? What claims are people making about Model 3 production that they didn’t falsely or misleadingly make about Model S and Model X production? Who still claims these days that Tesla can’t mass produce the Model S? Who still claims today that the Model X is a scam, vaporware, impossible to build, a Koolaid-enhanced dream? Who will admit in one year — when Model 3 production is going full steam (or full electric?) — that they were wrong and Tesla would actually find a way to mass produce the car for millions of people?

Who actually thinks Tesla won’t get there with the Model 3 in a bit of time?

Maarten showed the other day that Tesla’s ability to ramp up production of a mass-market car is actually quite similar to GM’s ability — at least, it seems to be more or less the same based on recent experience. He pointed out that Tesla might do better in the public’s eyes if it used the same terminology for its production schedule and didn’t overhype timelines. But a core point was that, yeah, Tesla has learned how to produce cars and is building up Model 3 production like other auto manufacturers build up production of their new models. There are hiccups and it’s a long ramp, but that’s how this stuff works.

In one year, will we still have people claiming Tesla can’t mass produce the Model S … er, the Model X … er, the Model 3? I doubt it. Most likely, we’ll have people claiming Tesla can’t mass produce the Tesla Model Y or Tesla Pickup or Tesla Semi. Perhaps I will then revisit this post and take a stroll down memory lane again.

*Sarcasm detected.

Related: Is Tesla Model 3 Actually On Original Schedule?









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