Tesla CEO Elon Musk hasn’t been known for setting goals they can meet, and the trend appears to be continuing with the Model 3. The company certainly isn’t struggling with demand for its upcoming mass-market electric car, but how fast will it be able to crank out the cars? Musk’s targets suggest that the company will be able to ramp production on the Model 3 so fast that they’ll fill most or all the preorders they’ve received for the car so far.
Lofty expectations for Model 3 ramp
There have been many natural comparisons between Tesla and other luxury automakers, especially as competing luxury brands like Mercedes and BMW launch their own electric vehicles. As a result, the comparisons between the Model 3 and similar cars from bigger luxury names come as no surprise.
Tesla took about 400,000 preorders for the car quickly after opening them up, and since then, Musk has been ramping production plans. Bloomberg‘s Tom Randall now reports that meeting his lofty production and sales targets would mean that in the U.S., the Model 3 would outsell the Mercedes C class and BMW 3 Series combined.
Voss Capital is betting on a housing market boom
The Voss Value Fund was up 4.09% net for the second quarter, while the Voss Value Offshore Fund was up 3.93%. The Russell 2000 returned 25.42%, the Russell 2000 Value returned 18.24%, and the S&P 500 gained 20.54%. In July, the funds did much better with a return of 15.25% for the Voss Value Fund Read More
Outline of Model 3 targets
Randall notes that Musk’s first target was to order 1,000 cars per week in July, 2,000 per week the next month, and 4,000 per week in September. Then Musk planned to boost production to 5,000 cars per week by the end of this year and then 10,000 per week by the end of next year. All these numbers are a far cry from the current 2,000 Model S and Model X vehicles Tesla currently produces per week.
In order to reach all of these targets, the company would have to produce approximately 430,000 Model 3 cars by the end of 2018, which Randall reports is more than the number of all-electric EVs that were sold globally in 2016. Further, he said even if half of the 3s that are produced before the end of next year are sent to international buyers, the Model 3 would be outselling the Mercedes C Class and BMW 3 Series in the U.S. on a combined basis.
Can Tesla pull it off?
Bloomberg New Energy Finance analyst Salim Morsy highly doubts that Tesla can fulfill Musk’s lofty ambitions, telling Randall that it would be “absolutely unprecedented based on what we know about car markets today and how people spend their dollars.”
Of course the company isn’t known for sticking with precedents, and that’s certainly the case with the Model 3 launch, as it’s doing things like jumping ahead in the prototyping process by skipping the “beta” and moving to what Musk calls a “release candidate.” This practice in particular is up to debate as some question whether this is a good idea. Unfortunately for Tesla and anyone who buys a Model 3, we won’t know until the first cars have been on the road for a while whether it is a good move to condense the process. If the cars end up being fraught with recalls and safety issues, then clearly it wasn’t.
Shares of Tesla stock rose by as much as 1.5% to $267.12 during regular trading hours on Monday.