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Comment by Animats | Hacker News Reader

Bloomberg's chart of Tesla Model 3 production[1] shows very low production rates in early June, around 1000. Maybe they saved some parts up for end of quarter. Let's see what happens over the next month.

A well-run production line produces about the same number of units per week. Tesla's weekly numbers are all over the place. Their cost per unit has to be very high, because the cost of running the plant is roughly constant as the output varies.

Eventually Tesla ought to get their plant debugged, but if they're doing assembly in a tent, that's in the future.

They also seem to be having trouble at the battery plant in Nevada, which is strange. That's a relatively simple product, and it's one they've built before.

[1] https://www.bloomberg.com/graphics/2018-tesla-tracker/

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They timed production to maximize federal tax credits for US consumers.

Can you clarify, did Tesla announce this, or are you announcing this?

Its discussed towards the bottom of that Bloomberg link.

Can you quote the text here? For the life of me I can’t find the section you’re referencing. I’ve heard the “timing production to match tax credit” thing before and it doesn’t make sense to me, hence why I’m trying to track down the primary source.

There's a tax credit of $7500 that will begin to be phased out as soon as they sold 200 000 cars to US customers.

Phase out starts with the same tax credit still applying for the remainder of the current quarter and the next one (before being reduced in later ones) and that's exactly the reason why they would want to match reaching the threshold to the beginning of a new quarter. This way they have as much time as possible to ship as many cars as possible to their customers (that's OK then since numbers sold do not affect the phase out beside the threshold of 200 000 cars).

The way the tax credit works is that a car company's customers get $7500 US tax credit for the first 200k Tesla type electric cars. Then begins the phase out. First the $7500 tax credit remains for the rest of the quarter when the 200k US sales was hit and the following quarter (so between 3 and 6 months). Then the tax credit goes in half for 2 quarters and then 1/4 the original for another 2 quarters. Seems strange to have a variable length phase out on the full amount but maybe the people who wrote the bill couldn't envision a company selling so many cars in a quarter that when in the quarter the company passed the 200k marker would be something the company would focus on.

Tesla is near the 200k mark and has been holding back domestic sales so to hit it at the beginning of a quarter (i.e now).

Edit: Here is a link to the official explanation of the credit in glorious IRS legalese (https://www.irs.gov/irb/2009-48_IRB#NOT-2009-89).

Relevant quote from the IRS to this discussion:

"The new qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period."

> > > They timed production to maximize federal tax credits for US consumers.

This is what is confusing me: if the credits are timed to domestic sales (so international sales don’t affect the timing of the tax credit phase out) what does this have to do with production?

It doesn't.

If timed right, they have 6 months to sell cars after the 200k cutoff. Some people say they have been storing some cars and not selling them along with selling more overseas so that all the cars produced (and sold, but with the reservation backlog, this is the same thing for now) for the next six months can get the tax credit. It has to do with production because you can't have sales of cars that don't exist.

> It has to do with production because you can’t have sales of cars that don’t exist

Rather, you don’t want to rush to produce vehicles you don’t want to deliver quite yet. You want to get to maximum output at the same time the timer starts on federal tax credits phasing out (which, keep in mind, would’ve happened without Model 3 production due to 2k/week Model S and X production).

It's under Hyperdrive Tesla Production Blog, Friday June 22, 2018: "The $366 Million Subsidy Play, Part 2" as well as "Tesla's 200K Strategy".

tl;dr they'd basically benefit from an additional 336M in government subsidies if they delay recording their 200k'th sale to July 1 instead of June 30.

Actually the customers benefit from the subsidy. No other car company has sold enough evs in the us to get to this point. After they finish q4 2018 and the subsidy if greatly reduced, there will be one less reason to hate tesla. How many volts and bolts has gm sold? I haven't ever even seen a bolt on the road. Apparently gm doesn't make many of them on purpose, too expensive for the batteries - tesla's super advantage!

You can say that all you want but there's virtually no difference between the two. Even tesla includes the subsidies in its cost calculations.

The word “tax” doesn’t even appear on the page when I search for it.

Are you on a different page?

A huge percentage of this quarter’s cars went to Canada to avoid triggering the tax credit sunset

Couldn't they just ship cars overseas? Or wait until the end of June to ship them?

That's what has been reported, that they slowed or re-routed deliveries not production. https://electrek.co/2018/05/25/tesl-model-3-massive-shipment...

They have done exactly what you say, sending production to Canada.

No. They timed DELIVERY. There are many reports of them holding assembled complete cars and sending stock to Canada.

Among other reports: https://electrek.co/2018/05/25/tesl-model-3-massive-shipment...

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