Elon Musk: "50% annual growth" + "500,000 in 2020". Which is most likely to occur?

[adiggs]

I actually meant to say:

Is it possible that (already in the first full year of production of the Tesla Model X) the global annual total number of Tesla Model X deliveries in 2016 will be higher than the global annual total number of Tesla Model S deliveries in 2016?

My own belief, though it isn't necessary for my investment hypothesis, is that it is INDEED possible for Model X volume to exceed Model S volume in it's first full year of production. Or maybe to be more accurate in my terminology, for Model X demand to exceed Model S demand (actually built vehicles might be different). The core of this belief is drawn from the efficiency dynamic of Model X and S.

With Model S at ~90 mpge, I'm expecting Model X to be ~80 mpge. I think that's actually low - that the difference in the two won't be that large, but even with a pessimistic view of the difference in efficiency, that translates into Model X being one of the most efficient vehicles on the road, or any class or size of car. There will be motorcycles running around that are less efficient than Model X.

For buyers of cars, if you're in the market for a car / SUV / wagon of approximately a Model S or X size, I believe that a whole bunch of people will treat the 2 cars as functionally the same for efficiency, and functionally the same for their footprint (handling in parking lots, garage space consumed, ease of parking on the street, etc..). And if the two are "the same", then why not get the car with bigger interior dimensions and that can seat a full 7 people? Not saying that is a 100% choice, but only that it's a compelling enough thought process that it turns the typical thinking about SUV on it's head (that you'd like a bigger car, but it carries such an outrageously bigger fuel bill that you settle for something smaller).

 

[Gerasimental]

My own belief, though it isn't necessary for my investment hypothesis, is that it is INDEED possible for Model X volume to exceed Model S volume in it's first full year of production. Or maybe to be more accurate in my terminology, for Model X demand to exceed Model S demand (actually built vehicles might be different). The core of this belief is drawn from the efficiency dynamic of Model X and S.

With Model S at ~90 mpge, I'm expecting Model X to be ~80 mpge. I think that's actually low - that the difference in the two won't be that large, but even with a pessimistic view of the difference in efficiency, that translates into Model X being one of the most efficient vehicles on the road, or any class or size of car. There will be motorcycles running around that are less efficient than Model X.

For buyers of cars, if you're in the market for a car / SUV / wagon of approximately a Model S or X size, I believe that a whole bunch of people will treat the 2 cars as functionally the same for efficiency, and functionally the same for their footprint (handling in parking lots, garage space consumed, ease of parking on the street, etc..). And if the two are "the same", then why not get the car with bigger interior dimensions and that can seat a full 7 people? Not saying that is a 100% choice, but only that it's a compelling enough thought process that it turns the typical thinking about SUV on it's head (that you'd like a bigger car, but it carries such an outrageously bigger fuel bill that you settle for something smaller).

Because the Model S competitors (MB S & E classes, BMW 5 and 7 series, Jag XJ, Panamera etc) are all near the 100k mark, while the Model X competitors (I don't what what CUVs people drive in the US, but over here that would be, Porsche Macan, Land Rovers, MB ML-class, BMW X3/X4, Audi Q5 etc) are closer to half that.

Luxury sedan for 10k more than competitors is more compelling than CUV for double the price of competitors. I've always assumed that Model X demand will not reach more than about 3/4 of Model S demand.

 

[30seconds]

Because the Model S competitors (MB S & E classes, BMW 5 and 7 series, Jag XJ, Panamera etc) are all near the 100k mark, while the Model X competitors (I don't what what CUVs people drive in the US, but over here that would be, Porsche Macan, Land Rovers, MB ML-class, BMW X3/X4, Audi Q5 etc) are closer to half that.

Luxury sedan for 10k more than competitors is more compelling than CUV for double the price of competitors. I've always assumed that Model X demand will not reach more than about 3/4 of Model S demand.

The X5 sold about 45,000 units in the US alone in 2014. The Acura MDX sold 65,000 in the US. Demand for large SUV (X5, Q7, Cayenne, MDX,...) is way higher in US than luxury sedans. Don't think CUVs are the right comparison as the X will have 3 rows and a higher price point.

 

[RobStark]

USA SALES

Large Luxury SUV	December 2014	December 2013	% Change	2014 ▴	2013	% Change
Cadillac Escalade & Escalade ESV/EXT​	3740 ​	2311	61.8%	30,522	22,514	35.6%
Mercedes-Benz GL-Class​	3394 ​	2239	51.6%	26,597	29,912	-11.1%
Infiniti QX80 / QX56​	1615 ​	1750	-7.7%	12,935	13,148	-1.6%
Land Rover Range Rover​	1482 ​	1340	10.6%	12,830	12,221	5.0%
Lincoln Navigator​	1792 ​	942	90.2%	10,433	8613	21.1%
Lexus LX570​	505 ​	675	-25.2%	4052	4625	-12.4%
Toyota Land Cruiser​	365 ​	326	12.0%	3158	3082	2.5%
Mercedes-Benz G-Class​	375 ​	199	88.4%	3090	2494	23.9%
---​	---​	---	---	---	---	---
Total​	13,268​	9782	35.6%	103,617	96,609	7.2%

Midsize Luxury SUV	December 2014	December 2013	% Change	2014 ▴	2013	% Change
Lexus RX​	13,625​	13,169	3.5%	107,490	103,920	3.4%
Acura MDX​	6761​	6538	3.4%	65,603	53,040	23.7%
Cadillac SRX​	4899​	6074	-19.3%	53,578	56,776	-5.6%
BMW X5​	6098​	1953	212%	47,031	39,818	18.1%
Mercedes-Benz M-Class​	5625​	4485	25.4%	46,726	41,326	13.1%
Infiniti QX60/JX​	3367​	3744	-10.1%	31,192	31,602	-1.3%
Lincoln MKX​	1669​	2547	-34.5%	23,995	23,913	0.3%
Lexus GX460​	2707​	1830	47.9%	22,685	12,136	86.9%
Audi Q7​	1928​	2279	-5.1%	18,517	15,978	15.9%
Land Rover Range Rover Sport​	2036​	2305	-11.7%	17,897	15,976	12.0%
Porsche Cayenne​	934​	1379	-32.3%	16,205	18,507	-12.4%
Volkswagen Touareg *​	605​	818	-26.0%	6961	8233	-15.5%
Infiniti QX70/FX​	448​	586	-23.5%	5213	6380	-18.3%
Volvo XC70 *​	470​	445	5.6%	5093	4882	4.3%
Lincoln MKT​	356​	598	-40.5%	4800	6014	-20.2%
Land Rover LR4​	736​	548	34.3%	4679	7093	-34.0%
Volvo XC90​	68​	688	-90.1%	3952	6845	-42.3%
BMW X6​	458​	722	-36.6%	3896	5549	-29.8%
Acura ZDX​	2​	14	-85.7%	78	361	-78.4%
---​	---​	---	---	---	---	---
Total​	52,792​	50,722	4.1%	485,591	458,349	5.9%

I think the most direct competitor and the model most likely to take the sales hit it in the shorts once Model X is released is Porsche Cayenne standard and plug-in. Although it starts at $58k it tops out at more than $158k for the Turbo S.


And the hardcore off road SUVs like G-Wagen,Land Rover Range Rover, Lexus LX570 and Toyota Landcruiser are almost never used for off-roading just as large vehicles capable of moving lots of people and their stuff in prestige. Model S will take a lot of these sales too. These are priced in the $80k-$150k range.

Finally, the Escalade and Navigator. Big but not so off-road capable. The only reason to buy this over Model X is if you are pulling a large boat/similar on a fairly regular basis. In Los Angeles, I always see these with 20" plus rims and low profile tires. Meaning owners not using to pull stuff. Will take large sales from this segment too on the West Coast and Northeast. Maybe not in the center of country where people go hunting/fishing and do actually pull large boats/stuff. These are priced in the $62k-$110k range but there are usually waiting list for the Cadillac and dealers order fully loaded versions due to limited supply no need to sell lower margin base versions.

 

[30seconds]

One of the other ways of looking at this is by asking how many people are buying the Q5 and X3 because the larger SUVs have atrocious mileage? I know more than a few people who ended up in these models but really wanted 3 rows of seating. They had the money for the larger ones but not the appetite for climate destruction / gigantasorous mobile.

Not to also mention that the Model S will be about 4 years old in 2016 and people generally like the latest and greatest.

 

[Benz]

I thought that Tesla Motors is working/investing to realise a production capacity at the Fremont plant that will enable them to produce as many Model S vehicles as Model X vehicles as from Q1 2016 (so that if required they can produce an equal number of cars of both the Model S and the Model X), and that the actual numbers of cars (Model S and Model X) that they will be producing as from Q1 2016, that it would just depend on the number of orders that they will be receiving for each of the Model S and the Model X?

 

[dhanson865]

I thought that Tesla Motors is working/investing to realize a production capacity at the Fremont plant that will enable them to produce as many Model S vehicles as Model X vehicles as from Q1 2016 (so that if required they can produce an equal number of cars of both the Model S and the Model X), and that the actual numbers of cars (Model S and Model X) that they will be producing as from Q1 2016, that it would just depend on the number of orders that they will be receiving for each of the Model S and the Model X?

Sure, but the new thing will always get the orders.

Model S orders will slow down when X comes along, Model S will slow down more when model 3 comes along.

Tesla will increase sales every step of the way and margins will be fine on the new product so they won't care about the exact mix. They'll just make whatever is requested and do what they can to expand and make a profit.

 

[jhm]

I thought that Tesla Motors is working/investing to realise a production capacity at the Fremont plant that will enable them to produce as many Model S vehicles as Model X vehicles as from Q1 2016 (so that if required they can produce an equal number of cars of both the Model S and the Model X), and that the actual numbers of cars (Model S and Model X) that they will be producing as from Q1 2016, that it would just depend on the number of orders that they will be receiving for each of the Model S and the Model X?

My understanding, and I hope some one would correct me if I'm wrong, is that the lines can produce either car so that any mix of X vs S could be supported. And since both cars are priced about the same, it won't matter financially what mix customers order. There of course my be specific parts constraints on the X or D that hold back some production during ramp up, but eventually the mix of cars will simply reflect relative demand.

This would be optimal for Tesla since in principle wait times represent a cost to customers that does not add revenue to Tesla. So you do not want a persistent situation where buyers of one model have to wait longer than buyers of another model. I'd be happy to see Tesla basically shut down production of Model S until the back order on the Model X is resolved, but I doubt Tesla will move that radically and production constraints may not allow it either. But in principle, I do not like to see one group of customers wait substantially longer than another group of customers, and the Model X buyers have waited a really long time already. However this plays out, investors should not think that if the volume of Model S deliveries falls below some arbitrary level that this somehow means that demand for Model S has been diminished. Paul Santos will make that argument, but he is a willful ignoramus. Catching up on the Model X backlog is the right thing to do for our customers.

 

[Benz]

My understanding, and I hope some one would correct me if I'm wrong, is that the lines can produce either car so that any mix of X vs S could be supported. And since both cars are priced about the same, it won't matter financially what mix customers order. There of course my be specific parts constraints on the X or D that hold back some production during ramp up, but eventually the mix of cars will simply reflect relative demand.

This would be optimal for Tesla since in principle wait times represent a cost to customers that does not add revenue to Tesla. So you do not want a persistent situation where buyers of one model have to wait longer than buyers of another model. I'd be happy to see Tesla basically shut down production of Model S until the back order on the Model X is resolved, but I doubt Tesla will move that radically and production constraints may not allow it either. But in principle, I do not like to see one group of customers wait substantially longer than another group of customers, and the Model X buyers have waited a really long time already. However this plays out, investors should not think that if the volume of Model S deliveries falls below some arbitrary level that this somehow means that demand for Model S has been diminished. Paul Santos will make that argument, but he is a willful ignoramus. Catching up on the Model X backlog is the right thing to do for our customers.

Well, the body line for the Tesla Model X will be separate anyway. The body line for the Tesla Model X will be installed/realised in Q1 2015. But I don't know how long it will take them to have it completely operational though. I guess we will hear more about it in the next few weeks.

And yes, I believe that the assembly line can produce both the Tesla Model S and the Tesla Model X. This assembly line is supposed to be really flexible. Elon Musk was speaking really optimistically about it during a conference call a few quarters ago.

I really think that Tesla Motors will be producing more than enough cars in 2016 to be able to deliver more than 100,000 cars to customers (at least 50,000 Tesla Model S, and at least 50,000 Tesla Model). And there will be enough orders to justify such high growth in deliveries in 2016.

 

[Gerasimental]

USA SALES

Large Luxury SUV	December 2014	December 2013	% Change	2014 ▴	2013	% Change
Cadillac Escalade & Escalade ESV/EXT​	3740 ​	2311	61.8%	30,522	22,514	35.6%
Mercedes-Benz GL-Class​	3394 ​	2239	51.6%	26,597	29,912	-11.1%
Infiniti QX80 / QX56​	1615 ​	1750	-7.7%	12,935	13,148	-1.6%
Land Rover Range Rover​	1482 ​	1340	10.6%	12,830	12,221	5.0%
Lincoln Navigator​	1792 ​	942	90.2%	10,433	8613	21.1%
Lexus LX570​	505 ​	675	-25.2%	4052	4625	-12.4%
Toyota Land Cruiser​	365 ​	326	12.0%	3158	3082	2.5%
Mercedes-Benz G-Class​	375 ​	199	88.4%	3090	2494	23.9%
---​	---​	---	---	---	---	---
Total​	13,268​	9782	35.6%	103,617	96,609	7.2%

Midsize Luxury SUV	December 2014	December 2013	% Change	2014 ▴	2013	% Change
Lexus RX​	13,625​	13,169	3.5%	107,490	103,920	3.4%
Acura MDX​	6761​	6538	3.4%	65,603	53,040	23.7%
Cadillac SRX​	4899​	6074	-19.3%	53,578	56,776	-5.6%
BMW X5​	6098​	1953	212%	47,031	39,818	18.1%
Mercedes-Benz M-Class​	5625​	4485	25.4%	46,726	41,326	13.1%
Infiniti QX60/JX​	3367​	3744	-10.1%	31,192	31,602	-1.3%
Lincoln MKX​	1669​	2547	-34.5%	23,995	23,913	0.3%
Lexus GX460​	2707​	1830	47.9%	22,685	12,136	86.9%
Audi Q7​	1928​	2279	-5.1%	18,517	15,978	15.9%
Land Rover Range Rover Sport​	2036​	2305	-11.7%	17,897	15,976	12.0%
Porsche Cayenne​	934​	1379	-32.3%	16,205	18,507	-12.4%
Volkswagen Touareg *​	605​	818	-26.0%	6961	8233	-15.5%
Infiniti QX70/FX​	448​	586	-23.5%	5213	6380	-18.3%
Volvo XC70 *​	470​	445	5.6%	5093	4882	4.3%
Lincoln MKT​	356​	598	-40.5%	4800	6014	-20.2%
Land Rover LR4​	736​	548	34.3%	4679	7093	-34.0%
Volvo XC90​	68​	688	-90.1%	3952	6845	-42.3%
BMW X6​	458​	722	-36.6%	3896	5549	-29.8%
Acura ZDX​	2​	14	-85.7%	78	361	-78.4%
---​	---​	---	---	---	---	---
Total​	52,792​	50,722	4.1%	485,591	458,349	5.9%

I think the most direct competitor and the model most likely to take the sales hit it in the shorts once Model X is released is Porsche Cayenne standard and plug-in. Although it starts at $58k it tops out at more than $158k for the Turbo S.


And the hardcore off road SUVs like G-Wagen,Land Rover Range Rover, Lexus LX570 and Toyota Landcruiser are almost never used for off-roading just as large vehicles capable of moving lots of people and their stuff in prestige. Model S will take a lot of these sales too. These are priced in the $80k-$150k range.

Finally, the Escalade and Navigator. Big but not so off-road capable. The only reason to buy this over Model X is if you are pulling a large boat/similar on a fairly regular basis. In Los Angeles, I always see these with 20" plus rims and low profile tires. Meaning owners not using to pull stuff. Will take large sales from this segment too on the West Coast and Northeast. Maybe not in the center of country where people go hunting/fishing and do actually pull large boats/stuff. These are priced in the $62k-$110k range but there are usually waiting list for the Cadillac and dealers order fully loaded versions due to limited supply no need to sell lower margin base versions.

As a European it made me laugh that X5, Q7, Range Rover and the likes are in the 'Midsize SUV' category

 

[RobStark]

As a European it made me laugh that X5, Q7, Range Rover and the likes are in the 'Midsize SUV' category

 

[Benz]

Well, the body line for the Tesla Model X will be separate anyway. The body line for the Tesla Model X will be installed/realised in Q1 2015. But I don't know how long it will take them to have it completely operational though. I guess we will hear more about it in the next few weeks.

And yes, I believe that the assembly line can produce both the Tesla Model S and the Tesla Model X. This assembly line is supposed to be really flexible. Elon Musk was speaking really optimistically about it during a conference call a few quarters ago.

I really think that Tesla Motors will be producing more than enough cars in 2016 to be able to deliver more than 100,000 cars to customers (at least 50,000 Tesla Model S, and at least 50,000 Tesla Model). And there will be enough orders to justify such high growth in deliveries in 2016.

And I think that the total global annual number of deliveries of the Tesla Model S and the Tesla Model X will increase with at least 50,000 each subsequent year. That means that the % of increase each year (compared to the total of the previous year) will decrease a bit every subsequent year.

Total global annual number of deliveries of the Tesla Model S and the Tesla Model X:
2016 - at least 100,000
2017 - at least 150,000
2018 - at least 200,000
2019 - at least 250,000
2020 - at least 300,000

And the delivery numbers of the Tesla Model 3 (and other Tesla Models) will come on top of that.

 

[evme]

Tesla's growth plan was pretty straight forward:

 

[dhanson865]

Tesla's growth plan was pretty straight forward:

View attachment 73845

If that graphic were even close to correct I'd have to ramp up my numbers. I'm assuming that is an old graphic though and we are probably 1 year behind schedule on the ramp?

Tesla Model S/Model X/Model 3 deliveries:
2015 - 50,000 / 15,000 / 0,000
2016 - 60,000 / 20,000 / 0,000
2017 - 70,000 / 25,000 / 25,000 (new cars trickling off the line end of year)
2018 - 75,000 / 27,000 / 100,000 (pushing to expand production, insane months of backlog of orders)
2019 - 80,000 / 30,000 / 250,000 (production of main factory full, 2nd factory tooling up, 3rd factory under construction
2020 - 85,000 / 35,000 / 420,000 (production at two factories solid, 3rd factory tooling up/getting out a few cars that year)

If we ramp up my slots for the attitude in that graphic...

Tesla Model S / Model X / Model 3 / Total deliveries:
2015 - 50,000 / 15,000 / 0,000 / 65,000
2016 - 65,000 / 25,000 / 0,000 / 90,000
2017 - 70,000 / 35,000 / 25,000 / 130,000 (new cars trickling off the line end of year)
2018 - 75,000 / 45,000 / 100,000 / 220,000 (pushing to expand production, insane months of backlog of orders, 2nd factory under construction?)
2019 - 80,000 / 55,000 / 250,000 / 385,000 (production of main factory full, 2nd factory tooling up or producing smaller volumes, 3rd factory under construction)
2020 - 90,000 / 65,000 / 420,000 / 575,000 (production at two factories solid, 3rd factory tooling up/getting out a few cars that year)

still below the old targets and maybe not the right mix?

 

[jhm]

Daaaannnggg!!!!! That is awesome growth. Where did this slide come from? I don't think anyone has been seriously contemplating 700,000 vehicles in 2019, at least no one outside of Musk's inner circle.

Note also that 39GWh spead over 700,000 vehicles is an average of 56 kWh per vehicle, not counting stationary. If the average for Model 3 is 50kWh (say 40 and 60 kWh packs) and the average of Models S and X is 80kWh, then this implies an 80/20 split, roughly 550,000 M3 and 150,000 MS/X. Assuming M3 ASP of $50k and $100k for MS/X. Then revenue is about $42.5B. If the split is more like 500k to 200k, then revenue is about $45B.

Note as a rough check on reasonableness, $42.5B on 39 GWh is about $1100 revenue per kWh. This seems about right to me, just a little lower than current prices on the Model S.

Going from $6B revenue in 2015 to $42.5B in 2019 implies an annual growth rate of 63%. This puts us at $69B in 2020. Looks good to me.

Tesla's growth plan was pretty straight forward:

View attachment 73845

 

[RobStark]

JB Straubel | Energy@Stanford & SLAC Sept 13 2013

I think the brain trust at Tesla have made revisions since then.

 

[jhm]

Rats, that's a little dated. It may be that this more recent 50% growth talk is a more toned down version of 65% growth from years earlier.

 

[Grendal]

I think it is extremely optimistic. I'm thinking that Tesla is trying to tone down the huge optimism to simply ambitious growth. There is just so much ramping up that needs to be done. Tesla needs to set up the supply chain and production lines for the giga-factory. They have to set up the supply chain and production line for the Model 3.

I would be perfectly happy with 500,000+ vehicles in 2020.

 

[jhm]

I think it is extremely optimistic. I'm thinking that Tesla is trying to tone down the huge optimism to simply ambitious growth. There is just so much ramping up that needs to be done. Tesla needs to set up the supply chain and production lines for the giga-factory. They have to set up the supply chain and production line for the Model 3.

I would be perfectly happy with 500,000+ vehicles in 2020.

In a way, it doesn't make much difference which double digit rate Tesla grows at. The slower Tesla must grow, the harder it would be for any company to try to keep up. And the longrun disruption to the auto and oil industries are the same. Lately people have been imagining how fast Apple could grow if it tried to make them. Despite of all the cash, logistics and technical capabilities Apple sits on, I really do not believe Apple would be able to sustain growth well above 50% for more than a few years. The whole endeavor is just that complex. If some competitor had the sauce to double every year for five years in a row, then Tesla's lead would not amount to much. But if the best the big boys can muster is about 50% for a few years, then Tesla has a secure lead. The harder the climb, the bigger the rewards.