- There was an email from Elon that was
leaked recently talking about their aim
for producing 6,000 units per week in June.
This is of the Model 3, to try to hit
the 5,000 goal.
Now, there's a couple things about this.
This is a pretty long email.
I'll link to this article so you guys can go read it
if you haven't read it already.
There's some really cool stuff in here.
You know, just Elon's tone and kind of how he speaks
to the employees I think it's a strong, but
appreciative kind of leadership style.
Which I think is pretty nice.
And so, the only thing.
The only kind of criticism I have here is that
if you're telling people that the goal is
6,000 per week in order to actually get
5,000 per week, you're kind of, you shouldn't
tell them that, we're setting our heights
super high so that way we can kind of, you know,
'cause we know we won't hit it.
I would say, just set it high and then you know
that the outcome will be you won't hit it.
But I think it was John Wooten, the old
college basketball coach that said something
like that.
You know, shoot for the stars and you'll
land on the moon, kind of a thing.
So, anyways, this is exciting and it
got me thinking, well, let's consult
the model here and see what these numbers add up.
I actually haven't done this, so this will be
kind of a real, live reaction as to what's
going on.
So, if you don't recall, a week ago,
or maybe two, I built this interactive
Model 3 Production Ramp that you can go.
If you go to Teslanomics.co, I'm sorry.
If you go to Teslanomics.co and then
Tesla Model 3 Ramp Estimator it'll take you
to this page.
You don't have to sign up or sign in
or anything like that.
You may get a pop up to join the email list
and you ignore that if you don't want to.
So, you know, this is open to everybody.
Now, I have already, the way this works is you have
Time1 and Value1 which are essentially the
point and time and the amount of cars they
were producing at that specific date.
And then you have the second point and then
you have the peak.
So, if we're still assuming the peak is
10,000 cars, meaning that's as many cars as
they can actually produce, the top of the S curve.
Using the log growth model we can punch in these
new numbers.
So, if they're going to do this by the end
of June.
Let me punch in that number.
I'll just punch in July 1st.
And then the number here, it will refresh,
'cause it's been sitting here for awhile.
All right, let's try this again.
7/1/2018
And then we'll punch in 6,000 for the goal.
I'll just drag this slider over until
we're right about there.
All right, let's go 5955,
let's see how that works.
So this is what that ramp would then look like.
This is using the log growth model,
so I'm not just making this up.
This is using actual math and I have
links to where I got the model from and
how that all works.
You can just Google that if you're unclear
about how log growth happens and stuff.
And again, really, the big question mark is
the peak and whether or not he can actually
10,000 per week on that one line at Freemont.
Or if there has to be a new factory,
or a new line.
Some additional thing that may take a year or
two to build.
But, let's assume.
So, we're just playing with the numbers,
kind of having fun here.
So, if they were able to achieve 6,000
or close to 6,000 by the end of June, then
you're looking at 296,000 Model 3's produced
in 2018 alone.
And then you're up towards, over 500,000
Model 3's a year in 2019.
And kind of continuing on from there it's not
going to go up much more because
you're at that peak.
So if you look, this means that by
let's say, December,
December 2nd.
They would be at 9,000 Model 3's per week.
They would end 2018 with 9,558 Model 3's
being produced per week.
If these numbers hold out and if this model
truly describes reality, which is
what we've been told.
But of course, these models are forecasts
and kind of predictions, which are never
100% accurate.
So, I think this is fun.
You can go check this out.
I'm curious what you guys think.
If you have speculation, you want to
punch in some different numbers in there.
You know, feel free.
Hit me up on Twitter, that's where I'm the most
engaged with folks and I'd love to see
what you guys come up with.
So let me know what you think about that.
In any event, no matter which way
you slice this, they're gonna have a pretty
monster year in terms of production.
So I think that overall is great.
This also was alluded to what Elon said,
that they're, they should be cash flow positive
by Q3.
And what that means is that in terms of
operations, the amount of money that they're
spending to buy or to make the cars is
exceeded by the money that they're getting
for those cars.
You know, prior to that, you're looking at the
per unit economics of each car, which is fine,
and that's usually a good place to start.
And then as you expand, you have to add in
overhead and all these other things.
So, if these numbers all shake out and if
Elon and these guys' predictions are relatively
close, they're gonna have a monster year.
Potentially be entirely profitable by
the end of this year going into next year.
No longer needing to raise capital and
really now having some solid footing
to shake up this industry.
Because if you think about it, overall,
Tesla is still a very small percentage of the
overall automotive market.
But, when they hit profitability and
they start producing 500,000 Model 3's alone
in 2019, those are some serious numbers that
I think a lot of other companies are
gonna start to pay attention to.
So, really, really good stuff.
Hoping that these come out.
Or that these numbers come true.
And I'd like to know what you think.
Leave me a comment and we'll chat about it.