Tesla's Model 3 production ramp is here, and the US auto market is starting to feel it

Discussion in 'Model 3' started by simonalvarez0987, Aug 12, 2018.

  1. simonalvarez0987

    simonalvarez0987 Active Member

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    #1 simonalvarez0987, Aug 12, 2018
    Last edited by a moderator: Aug 13, 2018
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    Since hitting its Q2 target of producing 5,000 Model 3 per week, Tesla appears to have accelerated its efforts to build and deliver the electric car to as many reservation holders as possible. The vehicle’s ramp has been anything but smooth over the past year, but now that Tesla is focusing on sustaining its production of the car, it seems like the results of the Model 3 push are finally starting to bear fruit.

    Tesla noted in its Q2 2018 production and delivery report that the Model 3 had a line of about 420,000 reservations as of the final week of June. Deliveries of the Model 3 rose steadily since Tesla started ramping the production of the vehicle. Over Q1 and Q2, sales of the electric sedan increased, culminating in July when Tesla is estimated to have sold as many as 14,250 Model 3 in one month.

    With such numbers, the Model 3 became the best-selling electric car in the United States in July, bar none. The rise of the Model 3 was so prominent that last month, it was listed as 7th place in GoodCarBadCar‘s list of America’s Top 20 Best Selling Cars, which included gas-powered vehicles like the Toyota Camry and the Honda Civic. These are vehicles that have held their places in the US’s auto industry for years, and the vast majority of them are more affordable than the Model 3.

    [​IMG]Tesla’s estimates sales for the Model 3 in July 2018. [Credit: Galileo Russell/gf1PizGaQos[/MEDIA]]YouTube]

    Yet, despite this, the Model 3’s sales show that more and more people are starting to commit to Tesla’s electric car. In the company’s Q2 2018 earnings call, Tesla global head of sales Robin Ren stated that the top five vehicles being traded in for a Model 3 were rather surprising, as they were comprised of mostly lower-priced cars such as the Toyota Prius, BMW 3 Series, Honda Accord, Honda Civic, and the Nissan Leaf. Among these vehicles, only the BMW 3 Series is an actual competitor in the midsize luxury segment. The other four are from a more affordable price point.

    According to Elon Musk, these trends in the sales of the Model 3 suggest that customers are quite open to spending a little bit more than their usual budget to purchase the electric car. This, Musk believes, is encouraging overall.

    “It’s just interesting that people are trading up into a Tesla, so they’re choosing to spend more money on a Tesla than their current car, just based on the trade-in values. A Civic is a very inexpensive car compared to particularly the Model 3 today. So that’s promising from a market access standpoint,” Musk said.  

    Tesla’s Model 3 ramp appears to be well on its way to sustaining the optimum manufacturing level displayed by the company during its “burst production week” at the end of June. Apart from Tesla announcing that it was able to maintain its 5,000/week Model 3 target in “multiple weeks” in July, the company has also registered an astounding 16,000 new Model 3 VINs in a seven-day period this August. That’s a number that took the company roughly eight months to achieve when the vehicle started production in mid-2017.

    As the Model 3 continues to make its presence known in the US auto industry, Tesla appears to be looking into expanding the Model 3’s reach to other countries. Deliveries to Canada have already started in Q2, and just recently, Tesla also announced that it would be offering the Model 3 for viewing in Australia and New Zealand. The company also showcased the Model 3 at the 2018 Goodwood Festival of Speed, where it attracted a good deal of attention from the festival’s attendees.

    [​IMG]Sales estimates for the Model 3 and the Chevy Bolt EV in July 2018. [Credit: Galileo Russell/gf1PizGaQos[/MEDIA]]YouTube]

    What then, of competing electric vehicles from other manufacturers? The Model 3’s main rival, the well-reviewed Chevy Bolt, has appears to have plateaued its sales in 2018. Estimates of the Chevy Bolt’s sales this year show that the vehicle has likely sold around 1,100-1,700 units every month since January, putting it below the Model 3’s numbers in 2018 so far. By July, the Model 3 is estimated to have outsold the Chevy Bolt EV 12:1.

    Particularly notable is that Tesla’s production ramp for the Model 3 is still just halfway towards its actual target. Tesla aims to eventually produce 10,000 Model 3 per week - a pace the company is seeking to achieve sometime next year. It took a very long time for Tesla to build up the Model 3’s lines to produce 5,000 vehicles per week, but with the milestone achieved, it appears that Tesla’s ramp for its most ambitious electric car is going nowhere but up. Once the Model 3 hits 10,000 per week, even America’s top-selling vehicles like the Toyota Camry could start seeing their sales get taken over by Telsa’s electric sedan.

    Article: Tesla's Model 3 production ramp is here, and the US auto market is starting to feel it
     
  2. Taylor S Marks

    Taylor S Marks Active Member

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    I think the most interesting competition to the Model 3 to watch is going to be the Toyota Prius. Last year, it sold over 1M copies globally and it represented around 10% of Toyota's revenue.

    Toyota doesn't have much margin to work with. Losing the Prius alone will be enough to push Toyota into the red. They don't have much cash on hand, either - it's only equal to about 2 years profits. I'm guessing the 3 alone will hurt Toyota quite a bit - adding the Y in could be a deathblow to Toyota once Tesla is able to produce 2M each per year.

    If Toyota doesn't bother putting up a fight, I can see Toyota bankrupt by 2025. And with the latest statements from Lexus's CEO, it sounds like they won't put up a fight before then.
     
  3. edhart2020

    edhart2020 New Member

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    Not a fair comparison.Although the Bolt is a nice, well-engineered small EV, it is being sold as a compliance car at this time.  Thus comparing the Model 3 to the Bolt missed the most critical point: Tesla only sells EVs and WANTS to sell them.Anyone else agree?
     
  4. marc.e.marcsf

    marc.e.marcsf New Member

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    I think I would agree it’s not really a fair comparison despite GM’s declaration of vehicle warfare.
    I drove both the Chevy Bolt and the Model S. Didn’t drive (not yet) the Model 3. I told Chevy at the time based on my test drive, I’d must rather spend the approximately $40,000 on a used 4-5 year old Model S than a new Bolt. They weren’t impressed.

    The Bolt seemed kind of kludgy in design and assembly. It really appeared like someone went into an auto design store and picked out a bunch of features and then threw them onto the Bolt. None of the features really work together like they do in the Model S. Things are there (e.g. backup camera, battery charge, cruise control, a/c, maps, etc) but they are all stand alone apps. And, the drivers seat is like a copy of a 1962 VW van seat - way kludgy.

    All of those gotcha’s on the Bolt combined with GM’s half baked efforts really remind me of the Pontiac Fiero. Anyone remember that or the Corvair? There’s lots of half baked, half supported GM ventures out there leaving the buyer to his own means to survive. Not saying Telsa has a better track record yet but it does seem they honestly care about their customers.
     
  5. marshall.cline

    marshall.cline New Member

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    Simon, shouldn\'t you acknowledge HyperChange TV for those images? The images clearly show HyperChange\'s watermark on the lower-right.
     
  6. simonalvarez0987

    simonalvarez0987 Active Member

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    Hi! Galileo Russell (the one I credited for the images) is the host of HyperChange TV, so we did credit him. The links on the credits of the images direct to his YouTube channel. :)
     
  7. dzcJohn

    dzcJohn New Member

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    Are you sure you have your info correct? I don't think Toyota has ever sold 1M Prius in a year.
     
  8. Taylor S Marks

    Taylor S Marks Active Member

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    Hmm... I could have sworn I saw higher numbers before, but it looks like the peak was around 892K in 2012, and most years they seem to be in the 400-600K per year range.

    So losing the Prius will hurt Toyota, but it won't put them in the red like I thought it would. They'll need to also lose a bunch of ICE sales to be pushed to bankruptcy (which is still possible. Model Y could tear sales of Rav4 apart.)
     
  9. GEofNB

    GEofNB New Member

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  10. GEofNB

    GEofNB New Member

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    It's not too surprising that a lot of people are trading up to a Model 3 from low priced economy cars. I'd say those people were woke on climate change, long before the Tesla Model 3 became available. They just couldn't handle the price of an S or an X or maybe didn't want that much car.
     

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