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aresant

This is good news.

Musks target of 500,000+ cars a year of velocity in 2018 is an insane goal!

By the numbers:

- They have just shy of 400,000 of the 3's on deposit, along with a backlog of other models.

- Last year Tesla shipped about 76,000 cars.

- Their Q4 delivery numbers were <25,000 cars and trailed expectations by about 5%.

- They blamed last quarter on autopilot hardware issues, eg OEM supplier / component issues.

- They made a significant uptick in velocity between Q2 (14,000 cars) and Q4 (22,200 cars).

I can't imagine how hard Tesla is pushing - for any Tesla HN's good luck! We are rooting for you :)

If, somehow, Musk reverses the chronic lateness and hits 500,000 in 2018 it's going to be quite the fireworks show.

https://www.bloomberg.com/news/articles/2017-01-03/tesla-fal...

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When he first announced that goal, his two top production people quit.[1] Now he has a guy from Audi heading up production.

Auto production lines usually produce about a car a minute. 500,000 cars a year is about two production lines running two shifts. In 2005, the NUMMI plant, which is where Tesla is now, produced 400,000 cars with 4,700 employees. Tesla is talking about reaching 9,300 employees. They do more than final assembly there, but still, that's a high headcount for an auto plant. Ford's Kentucky truck plant also produces about 400,000 units a year with about 4,500 employees.

[1] http://www.autonews.com/article/20160504/OEM02/160509943/2-t...

Tesla does much more in-house when compared to other auto plants, they buy more individual components and raw material and less partially assembled parts. I'm told that many of auto plants that produce the complete vehicle do mainly integration work these days. Tesla's approach is different, so they require more hands, but pay considerably less for the upstream supplies flowing into the plant.

In the UK we call this a 'screwdriver operation' where they don't 'really make cars' but they just put a few bits together, pre-assembled elsewhere. This started with the Japanese auto manufacturers wanting to compete in Europe, the UK government gave the incentives to Nissan and Honda but the factories were 'screwdriver operations' according to sceptics.

It's called an assembly plant in the US. There's nothing inherently wrong with this and it can actually afford greater automation and efficiencies in a number of ways. You have the option of receiving prefabricated components from multiple sources. If you're doing built to order manufacturing you can slot in variations more easily of they're complete modules assembled identically.

The more parts in assembly there are, the harder it is to control quality. You have to trust that the 3rd party supplier is meeting the required spec in manufacture and that the parts are damaged in transit.

> The more parts in assembly there are, the harder it is to control quality.

Which is why they tend to move to larger modular components. Things like seats arrive preassembled and simply need to be inspected and installed. Inspection can happen off the assembly floor and managed without disrupting production.

> You have to trust that the 3rd party supplier is meeting the required spec in manufacture and that the parts are damaged in transit.

You don't have to rely on 3rd parties to run an assembly plant. Your assembly plant can be fed by your own manufacturing facilities. But if you do rely on 3rd parties, it's definitely possible and companies like Apple do it with great success.

> The more parts in assembly there are, the harder it is to control quality.

The quality of passenger cars is so, so much higher now than prior to the use of these methods. It seems like they've got the quality control processes taken care of to some extent.

This is not so different actually, and has been done in the past by other auto manufacturers (some may even still be doing this today). The Ford River Rouge plant is the best example I can think of with literal Iron Ore going in one side and finished cars rolling out the other.

Musk may have been inspired by this plant. http://www.businessinsider.com/tesla-factory-like-ford-plant...

Here's Tesla's supplier list.[1] Tesla makes the battery, motor, aluminum stampings, and plastic parts. They also now make their own seats and some of the circuit boards for the electronics. Everything else (steering, brakes, wheels, etc.) is outsourced. Makes sense; that stuff is standard.

[1] http://insideevs.com/wp-content/uploads/2013/03/tesla-info.j...

Here is an interview with said Audi guy in a manufacturing industry journal, talking about the challenge of meeting the production goals, and how they're tackling it: http://www.mljournal-digital.com/meleadershipjournal/october...

It's an interesting read, and goes into more details about the "machine that builds the machine" concept that Musk has talked about recently. It gave me more confidence that Tesla might achieve a real leap forward in terms of productivity.

I read that and have zero confidence that there will be a leap forward in productivity.

Density of automation equipment is all well and good, but it comes at a price of being difficult to maintain. If a tool or a robot breaks in some way (and any FMEA will tell you about the myriad of ways that can happen) then people will need to get into the cell and fix it. If you need to remove a robot, gripper or fixture - well, that's going to be difficult if you've landlocked everything by packing the machinery in so densely.

Vision systems for handling are great idea, but they are a nightmare to set up and to keep clean, especially in a welding shop.

Robots that repair the looms of robots around them. Fantasy, and it will continue to be fantasy for a good while yet.

Pretty sure all factories have high ceilings so the track cranes overhead can remove any piece of machinery from the factory floor, piece by piece if necessary. At least that's what my Millwright buddy who has worked on power plants, canneries and paper mills has told me.

In car assembly lines there are often gantries, conveyor systems (accumulating and EMS), trunnions and other high level equipment that prevents the use of track cranes. First choice would be to extract heavy equipment by manitou or fork-lift, crane is a distant second best. It sounds as though Tesla aren't considering how to maintain or repair their model 3 line.

Why did people downvote you, it's an honest question? Anyway, I expect the Audi manu expert would consider this and make sure he doesn't design a system without that possibility.

Tesla doesn't need a major breakthrough in production technology. They're proposing to produce about as many cars as the NUMMI plant produced in its peak year. And Tesla has far more employees. Tesla's problem is going to be cost. They're trying to build a relatively fancy car at a low price. That's hard.

Tesla's big edge: they underpay their employees compared to other automakers. The workers are now talking to the UAW about organizing a union.[1] Musk sounds scared about this.

[1] https://www.bloomberg.com/news/articles/2017-02-09/tesla-emp...

I would love a Tesla but man those numbers would be a bit frightening if I were planning on purchasing one soon.. I don't see how they could scale up like that for a brand new model and not have quality problems. Best of luck to them!

You hit the nail on the head. It's the scaling/quality control problems that are the biggest risk. Also, from what I understand there have been quite a lot of problems with the different telsa models to date, but the top notch tesla service has been able to keep customers happy. That level of customer service is much easier to provide when selling a few $100,000 cars then when mass producing $30,000 cars.

The mechanics in /r/justrolledintotheshop complain about parts availability and the constant rolling changes. The door handles on the Model S are apparently up to revision "G".

Assuming Tesla parts start with "A" or no letter suffix, that actually doesn't seem too bad, in my experience. The Ford Focus I owned several years ago had 34 revisions made to the door handle assembly by the time I had to replace mine.

Yep agree 100% with you there. If anything I'd want a model revision coming a year or two down the track.

This. I don't want the first model year of any brand new chassis. Problems inevitably crop up even for companies like Toyota and Daimler.

It's worth noting that the first production cars are to be delivered to the Tesla employees who reserved one. This should have a positive impact on quality, both in terms of motivation ("the car I'm working on is mine"), and by having a shorter debug-fix-test cycle.

(I have no idea how many employee reservations there are.)

You should see the Tesla employee parking lot. Most of the people working on these cars will never afford one.

?? Tesla Model 3 full cost of ownership, esp including tax incentives in CA (where factory is) literally is the cheapest car on the market.

I guess I'm jaded from my week spent there. It was a whole different world to me. One lady talked to me about how this is her second job today and that she can barely make it on time to today's safety training because of the bus schedules. The parking lot was an ocean of beat up cars. The perception I got was that nobody on the production floor would ever own these cars.

I imagine there is a huge difference in the employee pool between their Fremont factory location and their Palo Alto office location. Of course, Tesla is not exactly known to pay even their engineers very well: http://www.autoblog.com/2016/03/08/working-tesla-meaning-str...

That just seems really sad. I've read that Tesla doesn't pay exceptionally well, expects people to work really long hours, and doesn't offer an employee discount because Elon doesn't believe in it.

Despite all this I've always imagined it to be a great place to work because of the world-changing potential of the work.

But the idea of all these people toiling away on an amazing product they can't even hope to own just seems incredibly depressing. I guess it's no different to all the people making iPhones in China, it just hits closer to home.

Elon is a capitalist, through and through. Treating workers well isn't even on his list of priorities, similar to Amazon.

Musk created a company that gives around 15,000 workers a job. The company he created is not just a capitalist endeavor, but an attempt to start an environmental movement aimed at making electric cars viable in the world market. At multiple points during the company's early days, Musk put everything he had on the line; assuming huge levels of risk.

Meanwhile, Tesla is not making a profit and one wrong move could destroy it - ending the jobs of thousands and an environmental movement in one fell swoop. Giving luxurious benefits to Tesla employees just isn't possible at this point.

Your criticism that Musk is just a capitalist who doesn't care about his workers and treat them well seems completely unfair.

Boo hoo, not treating your workers like shit isn't some impossible, gargantuan task. Working your engineers & labor 60+ hours a week makes for great sound bites, but significantly below average productivity. Combined with an employer that won't even take basic suggestions on improving workflow from their floor staff, Tesla obviously has a certain level of arrogance about how to build a car. Fuck the employees who actually do it day in and day out, they don't know shit according to Tesla.

Please. A shitty, low-paying, long-hour job with a great mission is still a shitty, low-paying, long-hour job.

Tax deductions are worthless if you're already low income.

It isn't a deduction but a credit.

But it's not a refundable credit. Which means you get whichever is the lowest of your tax liability or $7,500. Please note saying it's not refundable is term of art that does not mean what you might take it to mean. So let's walk through some examples.

Let's say your total tax liability for a year is $10,000. You paid in $11,000 via Payroll and other taxes. Without the credit you'd be due a refund of $1,000. If you are eligible for a $7,500 credit because you bought a Tesla you'd be due a $8,500 refund.

Let's say your tax liability for the year is $5,000. You've paid nothing in taxes for the year (probably because you knew you were buying the car and didn't need to). You bought a Tesla which makes you eligible for a $7,500 tax credit. You do not get anything refund from the IRS, but the $7,500 tax credit offsets your entire tax liability.

So just because it's a credit doesn't mean the credit is effective for low income people. You have to have enough income to have a high enough tax liability to even get the full $7,500.

Very few people with a tax liability of less than $7,500 would be buying a new Model 3.

This post is in response to someone saying "this is literally the cheapest car on the market", which is exactly what someone with that small of a liability would be looking for.

I'd like to see that math. Highly skeptical.

$35k for model 3 is pretty cheap... I wouldn't expect them to drive a $150k car though.

Sorry, but $35k isn't "pretty cheap" for the majority of the US.

What about for Tesla employees?

That's a pretty broad group ranging from janitor to assembly worker to engineer. I'd hazard a guess that the median Tesla employee could not afford a $35k vehicle.

$35k is basically a Lexus or lower-end Cadillac. You're easily into luxury range for a daily-driver.

My car was $20k brand new with several options tacked on. Most people I know have used cars... getting a new car of any kind is a big deal IMO for most Americans.

The average new vehicle purchased in the United States is $33,560[0]. The Tesla Model 3 is $35,000, PLUS $7,500 in government tax credit[1]. This puts the effective cost at $27,500. The Honda Civic, widely considered a cheap car, is $20,415 MSRP[2]. Once you factor in gas and maintenance savings, around $1,200 per year[3], the Tesla is cheaper after just over 6 years. Since most cars are kept for 20 years, that is a good deal.

Given that, I would say that calling it a "cheap" car is pretty accurate for most Americans. Obviously it is not in the range of used cars or the ultracheaps ($10-15K), but it's really amazingly cheap for an electric if they can make it happen.

[1] Note this is likely to be halved or a quartered for new orders as Telsa reaches the 200,000 vehicle mark [2] https://www.truecar.com/prices-new/honda/civic-sedan-pricing... [3] Rough estimate based on $150/mo in gas -> $50/mo in electricity

Is the 35k before the 7.5k discount in the US? All Tesla prices in the UK are quoted with the UK govt discount applied...

Yes, Tesla stated that the 35k is before the discount. So effectively it is 27.5k after the discounts, and they might offer further rebates for Tesla employees.

If you plan to keep an electric car for 20 years, I think it's not unreasonable to expect that you'll need to replace the expensive battery during that time period.

I thought everyone (well, most people) in the U.S. upgraded their car every 5-10 years?

The average age of a car on the road in the us is somewhere just over 10 years old. The averae person may be switching, but a bunch are switching into a new to them used car

I agree. But how much cheaper will a replacement battery (or repack) be after 10-15 years?

Will a 3rd-party battery replacement industry evolve, or will we always be stuck buying from the manufacturer?

The current Tesla packs seem to hold up pretty good. Users who are tracking the degradation are thinking a million miles is possible. Tesla has a test pack that has simulated half a million miles with <20% capacity loss. Warranty is 8 years unlimited miles.

If you are driving a half million to million miles in 20 years, an electric will probably really make sense. You MIGHT need to replace the battery. With a ICE car, you will need $5K of oil changes, $3K of timing belts, and around $20K more in gasoline than electricity, probably a new engine and transmission or two... There's probably another $5K worth of service in there (plugs, fuel injectors, transmission, belts).

So with a gas car you KNOW you're going to be in to it for basically as much as the purchase price of a Model 3 just in maintenance (again, if you are talking half a million miles).

https://electrek.co/2016/06/06/tesla-model-s-battery-pack-da...

That's a little over half the median household income. Average? Tell me median.

I will be very curious how many of those III will be the default base model. We have not seen the feature set at that price so I expect most people to be surprised as how spartan it is.

While they will avoid much of the touch/feel issues with regards to buttons the real test is where the good plastics start and end.

With regards to production targets, not only do they have to get their plant to that level their suppliers have to be able to hit those numbers as well.

I might just put my next car purchase off now. I would like to see how Tesla is doing with this car on September 20th

I thought I remembered reading that the average price of the preorders was in the $40K's, in which case that $35k price isn't very realistic.

When you preorder, you put down $1000 and that's it. There is no way to select any options for your reservation and there is also no pricing available for options right now.

Please don't use averages... The big expensive cars pull up the average disproportionally.

Please use medians.

It's surprisingly difficult to find the median car price. I just spent 15 minutes googling and could find neither the statistic itself nor a source of the data from which I could compute it.

> Since most cars are kept for 20 years, that is a good deal.

One thing to factor in though is the rate of deterioration of the battery pack over a 20 year period and other issues unique to electrics vs the maintenance requirements unique to an ICE vehicle.

It would be really interesting to see the breakdowns on those numbers.

What's the median? And even with that being the average "new vehicle" price, that doesn't mean the average American buys a new car. Lots of people can only afford used cars, and for many, $33K is their entire annual salary.

But over 3/4 of car sales are for used cars, which have an average price 1/3 of the new car average#. The Model 3 might prove to be good value for a new car, but a new one will still be unaffordable for many American drivers.

# https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/pu...

You don't think there will be used Model 3s on the market?

Not for the first year!

Why would you consider the used car market when talking about new car sales?

cheaper after 6 years, except you're not factoring in that honda's hold value very well and we have no idea how badly an 'early adopter' electric car is going to fare in the used market. Something tells me that the used market for a tesla isn't going to be as strong as for a honda civic

Something tells me that the used market for a tesla isn't going to be as strong as for a honda civic

Not sure why you'd assume that.

Current Tesla models have excellent residual values: 62% at 3 years according to black book, which is excellent for the luxury segment - and even better when you consider that EV values tend to be skewed by tax credits!

The Model 3 will share features like over-the-air updates that should help it retain value well.

https://electrek.co/2016/09/13/tesla-model-s-value-retention...

http://www.teslarati.com/tesla-retains-high-resale-value/

> most cars are kept for 20 years

Are you saying they're kept that long by the original owner? Do you have a source for that figure?

51% of Americans earn $30,000 or less a year [1] (yes, you read that right - and you wonder why populist candidates are so popular and why the anti-rich people sentiment is so strong...).

I wish Musk hasn't said that he's not going to make a car that's cheaper than $35,000. I know he wants to add Level 5 Autopilot and whatnot by default on these cars, but he really needs to get to the $20,000 range at least. That's where the real mainstream is, and not just in the U.S. either. EVs will go mainstream when they cost $10,000-$20,000.

It may take another decade to get there, but if Musk doesn't build such a car others will. It's just that I would've preferred a Tesla car to put pressure on the quality of the competitors as well.

[1] http://www.zerohedge.com/news/2015-10-21/goodbye-middle-clas...

It looks like there'll be further models after the Three:

"I'm super excited about being able to produce a car that most people can afford," Musk said. "And there will be future cars that are even more affordable down the road."

"With something like the Model 3, it's designed such that roughly half the people can afford the car," he continued. "With fourth generation and smaller cars and what not, we'll ultimately be in the position where almost everyone will be able to afford the car."

From here: http://www.computerworld.com/article/3062365/car-tech/elon-m...

Well then let's do some comparison shopping.

90% of the people living in the EU earn less than $30,000 per year. The EU's median household income is comparable to the US poverty line for median household income. The EU's GDP per capita is 60% lower than the US; they have 750 million people, with a total GDP 10% lower than the US.

Or take Sweden for comparison, it's below all but 12 US states when it comes to median individual income. The median US income is about 45% higher than the UK median. The number of countries on earth with a higher median income than the US, you can list on one hand.

These numbers are even more dramatically out of line, if you're talking about white households (which supposedly form the core of the populist anger). The median white household earns $75,000 and has a median net worth of $145,000 - an income number drastically higher than Sweden, Finland, UK, Germany, France, etc.

So remind me again how income numbers in the US are driving the populist anger.

This is fascinating. Do you have any sources to I can read further into this?

> I wish Musk hasn't said that he's not going to make a car that's cheaper than $35,000.

When did he state that? I'd only read the general plan of 'make an expensive high-end car, use profits to make a less expensive mid-range car, use profits from that to make an affordable car'.

Or did he mean that they don't need to make a cheaper car for widespread adoption since owners can rent the car out as a self-driving taxi to recoup ownership costs?

Average used car price in 2015 (US) was $16,800 [1].

So, I agree it will probably take a while for most people to be able to buy a (used) Tesla.

[1] http://www.usatoday.com/story/money/cars/2015/02/18/record-u...

The first Model 3s still qualify for tax incentives. $35k with a nice rebate on top is perfectly affordable on a middle class salary.

Who are these people buying brand new cars?

I feel like we live on different planets. I'm a software engineer making six figures and I can't imagine spending roughly $30-35k on a car when I can buy a decent used car for $7k, and spend less than $1k per year on maintenance.

Sure I can afford a $35k car, but if I choose to put that in my 401(k) instead it could mean retiring 3-5 YEARS earlier.

> "The car I'm working on is mine" and short debug-fix-test cycle

Just saying, at the announced pace, after 2 weeks they've provided cars to every Tesla employee, their partners and children. That's a short test cycle indeed ;)

You don't think they might be expecting to ramp production up during that time? >.>

That number is insane, they work with many 3rd party suppliers and any one of those have issues can cause delays for any number of thousand reasons. Tesla also needs to expand their tech support/repair by many folds. Working on cars and computers, any issues is going to take a good amount of time to fix, not even thinking of backlogs. It helps that they literally only have 3 cars, meaning 3 sets of parts to inventory one whatever needs to break, but still the stories of how they handle repair is really amateur.

According to Wikipedia, "As of May 15, 2016, Tesla had taken about 373,000 reservations" so I think the total number of reservations must be well north of 500,000 by now?

A bit related, they started production of the 2070(0) battery too.

2170 - 21 mm by 70 mm dimensions https://qz.com/879121/teslas-tsla-cheaper-more-powerful-2170...

Heh, I thought it was 20x70mm ..

> Musks target of 500,000+ cars a year of velocity in 2018 is an insane goal!

From a computing viewpoint, scaling a car production line is not a theoretically hard problem (it's very parallellizable, but you have to take supply chains into account).

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