One year ago this week, Elon Musk took to a stage to unveil his most important vehicle yet: the $35,000 Model 3. The electric five-seater accelerates as fast as the the best-selling luxury sport sedans in America—the BMW 3 Series and the Mercedes C Class—and costs about the same.
The value proposition was the best ever for an electric car, and the crowd ate it up.
But none of his pronouncements that night were as audacious as those to come. After taking in about 400,000 deposits at $1,000 a piece, Musk ramped up production plans. And then he ramped them up some more. Now, three months from the official start of production, the billionaire Tesla CEO seems to think he can not only match the performance of those top luxury brands, but outsell them in the U.S., too—in just one year.
Tesla has a number of tricks in store for the Model 3 launch, but first it’s worth taking a moment to appreciate just how high Musk has set the bar: With unusual specificity for an automaker, he disclosed detailed production targets in a call with investors last month that begin to paint us a picture.
First, Musk said the company is placing orders with suppliers for “1,000 cars a week in July, 2,000 a week in August, and 4,000 a week in September.” Tesla then plans to increase production to 5,000 cars a week by the end of the year, and 10,000 a week by the end of 2018. For context, the company is currently able to make about 2,000 Model S and Model X cars a week. Here’s what the Model 3 ramp begins to look like.
For Musk to hit all of his targets, Tesla would need to build about 430,000 Model 3s by the end of next year. That’s more than all of the electric cars sold planet-wide last year. The rollout will begin in California and move east, focusing on U.S. reservation holders. Even if half of the Model 3 inventory shipped to other countries, U.S. sales under Musk’s targets would outpace the BMW 3 Series and the Mercedes C class—combined.
Another forecast Musk reiterated is that Tesla thinks it can build 500,000 total cars next year. Model S and Model X growth would continue, but at a slowing rate. The chart below, as far as we can figure, is the ramp that Tesla is forecasting.
To sell that many $35,000 sedans in the U.S. “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars,” said Salim Morsy, electric car analyst at Bloomberg New Energy Finance. “It could happen. I’m pretty sure it won’t.”
Virtually every Wall Street analyst agrees. Even the most bullish among them don’t think Tesla can sell half a million electric cars next year, and Musk has a long history of never setting a deadline that he’s likely to keep. But it’s still important to understand the lofty targets Musk is setting, and some of the crafty ways he’s trying to make it happen.
Rewriting the rules for a car launch
Tesla is redefining how cars are developed, built, sold, and updated. Some of the tricks Musk plans to speed up the launch can only be done once. Others may transform the automotive industry much like Tesla’s over-the-air software updates. Here’s what we know: