On October 13th, the 100,000th Tesla Model 3 was produced, marking a small milestone in the collective transformation of the automotive industry towards intelligence and electrification.
Before the Model 3, many pure electric vehicle models had already sold more than 100,000 units, such as the Nissan Leaf and BAIC EC series. However, from the perspective of “relying on product strength to impact the same level of gasoline car market”, we prefer to talk about the historical significance of the 100,000th Tesla Model 3.
Looking at the U.S. market, things are changing. Despite the fact that the 100,000th car has already been produced, the market share of pure electric vehicles in the U.S. new car market was only 3.12% in September. On the other hand, although the absolute share is still very low, the speed of growth is impressive. “Starting from the release of the Model S, it took 54 months for the market share of pure electric vehicles in the U.S. to reach 1%, 9 months from 1% to 2%, and only 2 months from 2% to 3%.”
If we compare it further, we can see that the growth curve of Model 3 deliveries is similar to the growth curve of the market share of pure electric vehicles from 2% to 3%. In other words, “since August, when the delivery challenges were concentrated, Model 3 has almost single-handedly supported a brand new 1%.”
From this perspective, the production capacity problem of Model 3 has been solved beautifully. Even Elon Musk quipped that Tesla is transitioning from production hell to delivery hell. But internally, the improvement of Model 3 production capacity is limited. Here is the Tesla company-wide email sent by Elon on June 15th, with specific contents omitted. Simply put, at that time, the problems with the Model 3 assembly line included the painting workshop, assembly line 3, the newly established assembly line 4, the end of the assembly line, the welding workshop, and module production line 4 of the battery pack.Stamping, welding, painting, final assembly, and adding a battery production line. Among the five key processes of the entire Model 3 production line, except for stamping, all the other steps had problems. The purpose of this email is to require the management team to work together to solve all the issues within the next 15 days and finally achieve a production capacity of 5,000 vehicles per week by the end of Q2.
So, three months later, what was the production capacity of Model 3? As of October 12th, Tesla produced about 7,400 Model 3s in Q4, which means the actual production capacity of Model 3 until today is only 4,300 vehicles per week (Tesla’s factory operates in three shifts and does not have weekends off).
From this perspective, Tesla’s production capacity growth is far lower than the set production capacity target of the management team. On the one hand, Model 3 has already made a significant impact in the U.S. market. A car model with an average price of over $60,000 is gradually eroding the market of car models with prices ranging from $20,000 to $50,000 (Model 3 has replaced five best-selling car models in the market, including BMW 3 Series, Toyota Prius, Honda Accord, Honda Civic, and Nissan Leaf), and even boosted the market share of pure electric vehicles by one percentage point. On the other hand, the delayed production capacity goal, which has been postponed multiple times, was not achieved as expected at the end of the quarter when it should have reached 5,000 vehicles per week by the end of June.
As a Wall Street analyst or investor, how to decide the performance progress of Tesla, which seems to have serious conflicts? Let’s look at the following paragraph:
Working with him isn’t a comfortable experience, he is never satisfied with himself so he is never really satisfied with anyone around him. He pushes himself harder and harder and he pushes others around him the exact same way.>The challenge is that he is a machine and the rest of us aren’t. So if you work for Elon you have to accept the discomfort. But in that discomfort is the kind of growth you can’t get anywhere else, and worth every ounce of blood and sweat.
真正的挑战在于，他是一台机器，而我们不是。所以，如果你在 Elon 手下做事，你必须接受这种不适。但你在其他任何公司都无法获得这种不适带来的成长，这种成长让你付出的血泪都是值得的。
This paragraph is the answer given by Dolly Singh, SpaceX’s head of talent, on Quora to the question “What Is It Like to Work With Elon Musk?” The current conflicts in Tesla’s performance are a reflection of this strategy.
In 2015, when Tesla’s production capacity reached 50,000 vehicles per year, Elon announced development plans for Tesla to reach a production capacity of 500,000 vehicles per year by 2020. Many short sellers used this as an excuse to short Tesla, and a Merrill Lynch analyst’s analysis showed that even if Tesla reached a production capacity of 300,000 vehicles per year by 2020, the compound annual growth rate would need to reach 48% for seven consecutive years, a growth record that no other car company has ever achieved.
In April 2016, the Tesla Model 3 was released. A month later, Elon Musk announced that the production capacity goal for 500,000 vehicles per year would be moved up to 2018, and increased to 1 million vehicles per year by 2020.
In the latest Q3, Tesla produced 83,500 vehicles, which translates to an annual production capacity of 334,000 vehicles per year. Even with the new and ambitious 500,000 vehicle per year plan, the target is still underestimated. However, if we consider the plan made in 2015 which was thought to be “impossible with a compound annual growth rate of 48% for seven consecutive years,” reaching the 500,000 vehicle goal by 2020 is no longer in doubt.
If we attach Elon’s simple struggle philosophy, we will have a deeper understanding of his extraordinary sense of crisis and apocalyptic scenarios:> Work like hell. I mean you just have to put in 80 to 100 hour weeks every week. This improves the odds of success. If other people are putting in 40 hour workweeks and you’re putting in 100 hour workweeks, then even if you’re doing the same thing, you know that you will achieve in four months what it takes them a year to achieve.
如炼狱般工作，当你每周工作 80-100 个小时，你的胜算会更大；如果其他人每周工作 40 个小时而你每周工作 100 个小时，那么即便大家做的事情没差，你也会在 4 个月内做到别人一年的工作量。
However, is this a good thing to do? Not entirely. As Dolly Singh mentioned earlier, she is a machine but others are not. Executives leaving under long-term high-pressure cultures can also be understandable. Frequent executive turnover is not beneficial to a rapidly growing company. Even Dolly Singh herself left SpaceX shortly after.
This is an unfinished business, with new members entering the Tesla team constantly to accompany Elon on a journey. But Dolly Singh got it wrong, Elon is not a machine, he is human too.
:)* Autopilot 9.0 has been pushed, Tesla’s L4 takes the first step
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.