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Tesla Becoming The Largest Vehicle Maker After 2020

Tesla Becoming The Largest Vehicle Maker After 2020

I first wrote about this when first predicting that Elon may announce a second Secret Master Plan. Since then the second plan was released and more information released at the latest shareholders Q&A. I now feel more confident putting some dates and numbers on what I previously posted, so here goes...
I believe that not only will Tesla will be in the multi-millions of vehicles at about 2020, but in the tens of millions after that, unless other car companies finally get their act together.
All the requirements for that to happen are coming to fruition in the next year or two, and then two years after that the production will be getting put in place. Tesla will have reached the tipping point of rapid expansion, limited only by physical restraints, for several convergent reasons.
At around 2019/2020 Tesla will have their gigafactory fully running and producing batteries at around $100 per kWh.
Tesla will have their Model 3 and Y running and producing 1-2 million cars per year and will be on their 2nd to 3rd iteration of production lines.
Tesla will have their pickup, semi and mass transit vehicles in production.
Tesla will have fully proved the demand for electric vehicles. They will be better and cheaper than an equivalent ICE vehicle in almost every quality, safety, utility and financial aspect.
Tesla’s fully autonomous system will be legal in many countries.
Various countries will have passed their already indicated regulations banning the purchase of ICE vehicles from 2025 onward.
The threat of Climate Change will be more apparent than it is now.
Therefore, everything will be in place around 2020 such that there is no good reason to buy a new ICE. Not only is an EV better in almost every respect, but you can expect a new ICE vehicle’s residual value to be close to 0 a few years after you buy it. Almost everyone will want to buy an EV, the demand will be in the multi tens of millions, but the supply will not be there.
Tesla will then be able to raise as much finance as they require to duplicate their battery and car production around the world as fast as possible.

carlk | 5 augustus 2016

The general public still do not understand the fundamental advantage of the EV as a vehicle. A lot of education is needed but people will start to pay attention when they see a lot of them around. That's when the tipping point will occur. Another thing is the autonomous driving and shared mobility. There will be less need of one car for every driver. The total auto market will drop significantly. That's why no established auto company is really interested in autonomous driving other than just put enough effort to keep up with others. It will be up to Tesla, and perhaps add Google or Apple, to develop the product that will eventually dominate the market. Other automakers would only play catch up when they see it's unavoidable and some likely will not make it.

Peter Gregory | 5 augustus 2016

There is no way that Tesla is the biggest in 4 years. If you said 2030, maybe they have a chance. The transition from spunky startup to dominating the a large, established, manufacturing sector isn't as easy as taking over a new, software based area.

Red Sage ca us | 5 augustus 2016

There are three or four companies that are capable of manufacturing on the order of 10,000,000 vehicles each per year today. Even if Tesla Motors were to double their manufacturing output every year it would take a good long while before they reached 10,000,000 units per year. I'm not so certain that will even be necessary. Because, by the time Tesla Motors has reached even 4,000,000 units per year, many of the other traditional automobile manufacturers will have either switched to fully electric, or gone out of business.

Bighorn | 5 augustus 2016

"After 2020" offers an infinite number of years to be accurate. "By 2020" would be a prediction, a bad one, but something to hang one's hat on. Even Elon wouldn't take that bet.

bob.naughtin | 5 augustus 2016

@Peter Gregory
I did not say Tesla would be the biggest in 4 years. I said they would be the biggest after that. What I was saying is that in 4 years they will be expanding as fast as physically possible for the reasons given, and then will become the biggest during that expansion.

Ross1 | 5 augustus 2016

@bb:
Do you have links for those statements?

SCCRENDO | 5 augustus 2016

@Ross. What kind of links are you looking for? All the posters here are just presenting their thoughts. Unless we have a newspaper from the year 2020 it is tough to provide links.

dansplans | 5 augustus 2016

@Ross lol
@bb

The whole world is not suddenly going to see the light in 3 years time. Where is all this product demand going to come from? And don't give me any shiite about you saying 4 years above. If Tesla has not begun their domination and buildout in 3 years, then everything you predicted is hallucinations from tainted koolaid. As a matter of fact, if Tesla does not sell 500,000 cars in 2018, then the rest of is is tripe from the getgo.

It is not only the ICE manufacturers who have to be dragged, kicking and screaming, into the 21st century. It is also the general car buying public. Think of electric cars like women entering the workforce since about 1950. They have to be twice as good, at half the price, to get the recognition they deserve. And even then, there are Neanderthals who will never accept women as equals. EV's get less respect than working women.

Fact: The product segment that the Model 3 hopes to take over, allows the leader 100,000 unit sales.

We'll give Tesla a huge pass on that reality and say they can dominate and achieve 250,000 sales. I'll also drink some koolaid and give them 100,000 sales of other vehicles. So 350,000 sales, say for 2019. (I know you will lose it over this base number, but too bad - it is my number)

A 10% annual growth to that would be an astonishing achievement. But I'll grant 15%;
2020 - 402,500
2021 - 462,875
2022 - 532.306
2024 - 612152
2025 - 703,987

I'll give Tesla another free pass and say they will up sales above 750,000 in 2025. They could potentially even sell 1,000,000.

All of my numbers are a huge stretch here, you know, on planet Earth.

Other factors: V.W., G.M., Nissan, B.M.W., Ford, etc.

Please provide one rational reason why G.M. for example, will not drop the price of the Bolt below 25,000 and steal half or more of Tesla's intended market? What about all the other players? You actually think everyone is going to play dead so Tesla can become the only kid in the sandbox? (Don't start about Tesla's unassailable market advantage. It is currently a myth. Even if Tesla leads, others can and will follow closely on costs)

The stark reality is that the big auto companies will start to play hardball, in ways that you apparently can't imagine. The end result is that Tesla is no longer a threat, because they will have forced Tesla to cease operations. You can't design the machine to build the machine, when you can't fund the machine.

Currently the world runs on oil, and cold hard cash. Tesla rejects the former entirely, and has none of the latter. At least not in the huge quantities needed to do even a portion of your "prediction" ( again - Do not start about huge profit streams from operations. Even the $5billion EM suggest may come with 500,000 sales is barely spit in a bucket compared to your projected scale.)

SCCRENDO | 5 augustus 2016

@dansplans. I see the biggest problem being Tesla's ability to ramp up production sufficiently. One solution may be for Tesla to find a partner in the existing industry. It seems like their partnerships with Toyota and Mercedes for example were relatively limited. Tesla is totally committed to EVs whereas the other automakers are just dabbling and are using it for carbon credits. Walking into dealerships to purchase an EV or hybrid you quickly get steered towards the gas guzzler of the day. This is also the reason why I speculate the Bolt won't be a serious competitor. Not sure how much GM is truly committed to the EV. If Hillary is president there will be more incentives to produce EVs and Tesla will benefit. With Trump I think we move in the opposite direction. Elon's master plan is still dependent on government subsidies at least to consumers and perhaps carbon taxes to reach full potential.

bob.naughtn | 5 augustus 2016

@dansplans
You need to read my post again.
You may also want to read about how the US converted it's manufacturing for the war effort within months in the Second World War.

carlk | 5 augustus 2016

@dansplans

"A 10% annual growth to that would be an astonishing achievement. But I'll grant 15%;"

Thank you for being so generous but Tesla has been growing at the rate of 50% per year and plan to grow even faster.

"Please provide one rational reason why G.M. for example, will not drop the price of the Bolt below 25,000 and steal half or more of Tesla's intended market? "

Because GM does not have a Gigafactory that could provide low cost battery to power few hundred thousands of EV each year. Mater of fact I seriously doubt that GM could even make much more than 20~30K Bolt a year promised not to mention they probably will lose money in each car they sell. Here is why you can never fight the disruptor that does not carry a bag. Do you think Barra is really that brave that she would go to the GM board and say give me $5 billlion to build a battery plant, I think it's really important?

Dramsey | 5 augustus 2016

Bob,

You may also want to read about how the US converted it's manufacturing for the war effort within months in the Second World War.

You've brought this up before as an example of what's possible, but it's no longer possible today. Just filing the environmental impact statements for that level of industrial expansion would take years. As a recent example here in Nevada, it took over eight years to complete a section of highway less than 1o miles long.

Also, back then, the US population was unified in cause and purpose. I think it unlikely that this will happen again, for any reason, within the next few decades.

bob.naughtn | 5 augustus 2016

@Dramsey
You said "You've brought this up before as an example of what's possible, but it's no longer possible today."
followed by:
"Just filing the environmental impact statements for that level of industrial expansion would take years."
I have previously posted that I expect Tesla to announce plans for new plants in China and/or Europe very soon. They do have years available to them. There are multiple countries eagerly trying to entice Tesla to build plants in their countries. The gigafactory started very soon after Nevada was chosen i.e. it was not years, but closer to months.

Ross1 | 6 augustus 2016

@bob:
That is a very clever thing you are doing, how do you do it?
I refer to switching within one topic back and forth from naughtin to naughtn.

Of course your number plate now makes more sense: bb0tin: to be naughty in. Not Bernard tho. What is the go?

But I don't believe it was your girlfriend gave it to you.

dansplans | 6 augustus 2016

@carlk You make a valid point about battery supply, but there is no reason all the other battery supplier can't ramp up production. There are several Gigafactories in development. If Tesla can go from shovel to production in 3 years, others can do better in places with lax controls.

You have talked about Tesla and their rate of growth elsewhere, and it has been impressive, from a base of zero. It is simply unsustainable at 50% and more annually.

I'll give you a simple further example of how Tesla can be delayed by competitors. During Walmarts' explosive growth phase in North America, many communities as well as retailers did all they could to stop them. The simple tactic of sending hordes of "witnesses" to testify at environmental impact tribunals and various zoning and licensing authorities, has delayed some expansion plans for many years. Other plans were dropped entirely as the excessive red tape and ongoing litigation was becoming material to their costs and profit.

Do you not also think that GM and others would gladly suffer a few years of multi-billion losses, in the EV segment, to get rid of Tesla?

SCCRENDO.Ca.US touched on a major root issue above. The ability to ramp up to extreme levels, costs many billions which Tesla does not have. Tesla cannot issue bonds at reasonable rates and must rely solely on equity issues. How many times can they go to the well? SCCRENDO.Ca.US's other thought of teaming up with a large auto company who wishes to convert production to an EVcentric world, is a very practical and logical means to an end. Not an easy transition, but one that could actually be a start towards some of the OP.

nightwolf9ss | 6 augustus 2016

One thing I hope is that all gas/diesel automakers die as punishment for not converting to electric a while ago when it would have been economically and technologically possible(with a little bit of govt. help but they get govt help anyway).

They've polluted the air in our cities long enough, they must die ,not start making electric cars, DIE,and let electric start-ups take over, there needs to be a punishment.

Tesla-David | 6 augustus 2016

I believe Tesla EVs will be mainstreamed by 2030. Watch this talk on Clean Energy and Transportation Disruption by Tony Seba (Clean Disruption - Why Energy & Transportation will be Obsolete by 2030 - Oslo, March 2016), which provides evidence for how fast it can happen based on historical examples. https://www.youtube.com/watch?v=Kxryv2XrnqM

fgaliegue | 6 augustus 2016

Like many, I do not believe that Tesla will reach the top spot, whether in the US or worldwide, anytime soon.

However, they have a clear technological know-how of electric drivetrains now -- nobody can dispute them that. For the automakers which miss the development train, Tesla will be, I think, their #1 choice for providing drivetrains. Just like they did for the electric Smart car so long ago.

And this, in turn, means more money for them to build more cars and fuel their expansion.

risingsun | 6 augustus 2016

With elon making the machine of the machine, maybe the fremont plant can produce a few million vehicles instead of just 500,000.

JeffreyR | 6 augustus 2016

@dansplans wrote, "Tesla cannot issue bonds at reasonable rates and must rely solely on equity issues."

Is this because they have tied up their equity already? I don't see this as self-evident.

Elon's self-described ambitious goals are 500K by 2018 (not sure if that's rate of production or capacity or deliveries) and 1M by 2020. We should know a great deal more by late 2017/early 2018. Even if they miss by 3 months and 10% (non-trivial 50K), that would still be amazing. And, I think most would be more impressed than disappointed. If they slip by another 3 months and 10%, for 2020 we are still talking 700K cars w/ ASP of over $40K and 200K w/ ASP of over $90K. That's Billions in revenu, over $4.6B.

At that point Tesla will be on its way w/ the much need cash you mention. Will they dominate global auto-makers w/ 900K in sales? No, but they will have shown a clearly superior EV experience can be a major force.

rdcollaborative | 6 augustus 2016

@dansplans
You said "You have talked about Tesla and their rate of growth elsewhere, and it has been impressive, from a base of zero. It is simply unsustainable at 50% and more annually."
Ford did similar in the past
http://insideevs DOT com/wp-content/uploads/2015/11/tesla-ford.png
China is doing a continuous 50% growth rate in production into the 10's of millions
http://www.rba.gov DOT au/publications/bulletin/2011/mar/images/graph-0311-4-03.gif

rdcollaborative | 6 augustus 2016

@dansplans
You said "I'll give you a simple further example of how Tesla can be delayed by competitors."
Several countries are pursuing Tesla manufacturing. India, for instance, wants to be 100% electric in 2030. This requires massive production. They will regulate to get this if necessary.

AoneOne | 6 augustus 2016

While it is a part of the master plan, I think the impact of autonomous car sharing has not been given enough consideration. Once cars are capable of this, the demand for new cars will drop dramatically Tesla might make the cars that are most suited for this, and then they'll gain market share of this shrinking market, but that's not guaranteed.

Uber might very well own my next car.

rdcollaborative | 6 augustus 2016

@AoneOne
You said "Once cars are capable of this, the demand for new cars will drop dramatically"
On the contrary, in the short to medium term, the demand will skyrocket. It will take many years to satisfy the demand due to the size of the current car population and the rate of production.

AoneOne | 7 augustus 2016

@Bob: "demand will skyrocket" for cars in aggregate or just for Tesla's industry-leading models?

rdcollaborative | 7 augustus 2016

@AoneOne
It will skyrocket most for electric autonomous cars, which pretty much means Tesla.
When you look at the costs of running a taxi, the major costs are the driver and fuel. A human driven taxi cannot compete with an autonomous taxi. An ICE autonomous taxi cannot compete with an electric autonomous taxi. Taxis are a cost driven service. Every taxi fleet in the world will want an autonomous electric taxi.

Red Sage ca us | 8 augustus 2016

dansplans: Tesla Motors has planned to have a 700,000 unit capacity at Fremont since at least September 2013. The Gigafactory was originally expected to be able to supply 500,000 vehicles by 2020. It is now being built to build enough battery packs to cover 1,500,000 cars by 2020.

General Motors already did their 'big drop' in price for the BOLT -- to the $37,500 expected sales price. They cannot reasonably do any better than that. GM was rather angry when its internal cost on battery packs for the BOLT was accidentally revealed to be about $143 per kWh. I expect Tesla Motors cost to be less than $130 per kWh.

SCCRENDO: A couple of points... There are no 'carbon credits' to be had, at all. Elon Musk has said since at least early 2013 that no one should count on receiving any type of benefit, whether rebate or tax incentive, for buying a Tesla Generation III vehicle. He figures that political pressure will likely lead government officials to eliminate them, even before they run out.

rdcollaborative | 8 augustus 2016

@Red Sage
You said "GM was rather angry when its internal cost on battery packs for the BOLT was accidentally revealed to be about $143 per kWh."
The cost was the cell cost not the pack cost. They are quite different.

You said "I expect Tesla Motors cost to be less than $130 per kWh."
Tesla have already said that their pack cost is less than 190kWh.
Tesla have also said that the gigafactory cell cost will be more than 30% cheaper.
There is no 'I expect'. Tesla have already signalled it to be so.

You said "There are no 'carbon credits' to be had, at all." and followed this with "Elon Musk has said since at least early 2013 that no one should count on receiving any type of benefit, whether rebate or tax incentive, for buying a Tesla Generation III vehicle."
Purchasers in the US will get the $US7500 tax credit until they run out.
Purchasers in the US may get state credits, municiplal credits or rebates.
Purchases in the US get other benefits like HOV access.
Purchasers in other countries may get several credits, rebates and benefits..
Tesla still makes millions selling BEV credits.
Your statement was nonsense.

dansplans | 8 augustus 2016

@JeffreyR

Tesla's debt is not investment grade, so the largest sources of debt funding are not available to them. That is unlikely to change in the short term, and could well carry on for quite some time, if there is no evidence of profits in quarterly reports.

Further stock dilution from equity issues is the only viable option to raise the many $billions their current plans call for, assuming Tesla continues forward as a stand alone company.

rdcollaborative | 8 augustus 2016

@dansplans
You said "Further stock dilution from equity issues is the only viable option to raise the many $billions their current plans call for"
Why cannot Tesla continue to get cash loans like this?
http://www.businessinsider.com.au/tesla-just-borrowed-750-million-but-do...

dansplans | 8 augustus 2016

"However, Musk also stated, during the same call, that the company would need “staggering” amounts of capital expenditures."

The loan you mention has enough restrictions attached, that you won't be seeing it repeated. They have mortgaged parts of their operations, and have certain financial handcuffs attached, for Tesla, and present and future subsidiaries. You actually prove my point rather than refute it.

"On the Closing Date, the Borrowers provided an unconditional guaranty of all amounts owing under the Credit Agreement and related credit documents. Certain material subsidiaries of the Borrowers are required to become parties to these guaranties. The Borrowers have also granted security interests in their respective accounts, inventory, certain equipment, certain related assets, specified deposit accounts for the collection of accounts receivable, and certain other accounts to secure all obligations of the Borrowers under the Credit Agreement and the related credit documents. Future subsidiary guarantors are also required to become a party to the applicable security agreements.
The Credit Agreement contains customary affirmative covenants, such as financial statement reporting requirements and delivery of borrowing base certificates. The Credit Agreement also contains customary covenants that limit the ability of the Company and its subsidiaries to, among other things, pay dividends, incur debt, create liens and encumbrances, or redeem or repurchase stock. Under certain circumstances, the Company is required to maintain a minimum fixed charge coverage ratio.
The Credit Agreement contains customary events of default, such as the failure to pay obligations when due, initiation of bankruptcy or insolvency proceedings, defaults on certain other indebtedness, change of control, material breach of representations and warranties, and the failure to meet certain liquidity conditions with respect to the Company’s convertible senior notes. Upon an event of default, the lenders may, subject to customary cure rights, require the immediate payment of all amounts outstanding and foreclose on collateral."

This is a 3 year term and they could get more like this. It's just that each subsequent loan will have to pay off the previous one.

This does nothing to help with the $5 billion or so needed over the next 12-15 months. Robots and production cost scads of cash.......enter $2-3 billion equity raise within 4 weeks.

Bighorn | 8 augustus 2016

EM said that ZEVs are trading for pennies on the dollar and that CARB needs to be more aggressive about efficiency goals.

rdcollaborative | 8 augustus 2016

@dansplans
You said "The loan you mention has enough restrictions attached, that you won't be seeing it repeated." followed by "This is a 3 year term and they could get more like this."
Isn't that a contradiction?

You said "It's just that each subsequent loan will have to pay off the previous one."
Why?

You said "This does nothing to help with the $5 billion or so needed over the next 12-15 months."
Tesla does not need that funding. Where did you get it from?

The title of the thread is "Tesla Becoming The Largest Vehicle Maker After 2020"
What happens over the next 12-15 months is not relevant.

dansplans | 8 augustus 2016

BB I am going to give you the benefit of the doubt and assume you aren't a complete financial idiot. Read the some of the loan terms. You cannot mortgage the same assets multiple times. The banks could also control their receivables accounts.

There is no contradiction when any subsequent loan will require the retirement of the previous loan.

In the news today, Tesla will spend $2 billion for their share of gigafactory, but warns expenditures could be much higher. They have spent less than $500 million to date. That leaves a minimum of $1.5 billion just for the gigafactory. And car production ramp up? Oh I keep forgetting EM and JB snap their fingers, and stuff happens. $5 billion by 2018 is a lowball estimate of needs actually. I expect 2 equity raises of $2-3 billion each.

What happens over the next 12-15 months is the critical factor to where Tesla is in 2020 and beyond. If they do not hit major milestones by 2018, there is zero chance of any huge performance numbers, in line with predictions, by 2020.

rdcollaborative | 8 augustus 2016

@dansplans
You said "You cannot mortgage the same assets multiple times."
Well yes you can, but who says they are the same assets being mortgaged anyway?

You said "$5 billion by 2018 is a lowball estimate of needs actually."
You seem to be forgetting that Tesla has an income, and a lot of expenditure is financed from income.

You said "What happens over the next 12-15 months is the critical factor to where Tesla is in 2020 and beyond."
I have explained in my OP why that is not true.

dansplans | 9 augustus 2016

I reread to OP to see if I had missed something substantial. I have missed nothing as the OP was full of nothing but over-inflated wishful thinking. The odds of these predictions coming true are virtually zero.

1. Tesla has ambitious plans for the M3 no doubt. They will be doing very well if they can in fact produce and sell 500,000 per year by 2020. That is in line with the original timetable, which has always been a stretch.

2. Battery costs may approach $100 per kWh by 2020. They may not. A whole lot of what you project is dependent on this single factor. Even if battery costs reach this target, there is little hope for the rest....

3. You have the M3 and MY selling upwards of 2 million per year by 2020. Very impressive for a pair of vehicles where one is not yet in production, and the other is not off the drawing board.

4. Pickup, Semi, and Mass Transit all in production by 2020. See above re: drawing board.

In the past I have referred to you as Mr. Wormwood. While not inaccurate, I have been mistaken. The correct name is Basileus.

rdcollaborative | 10 augustus 2016

@dansplans
You said "They will be doing very well if they can in fact produce and sell 500,000 per year by 2020. "
Why? Tesla have said they will be doing 500,000 in 2018.
Please explain what knowledge you have that Tesla does not have.

You said "A whole lot of what you project is dependent on this single factor."
No it does not. The Model 3 will about $US130kWh is already as good as a comparable ICE car. The same goes for the S and X and less than $US190 per kWh

You said "Very impressive for a pair of vehicles where one is not yet in production, and the other is not off the drawing board."
Why? Elon has explained his plans for the 1.0 to 3.0 production, and this is simply a calculation based on that.

You said "See above re: drawing board."
2020 is 4 1/2 years away.
The average new car development cycle is about 3 years.

You said "In the past I have referred to you as Mr. Wormwood. While not inaccurate, I have been mistaken. The correct name is Basileus."
Why do you insist on personal insults?
It does not help your argument at all. You continuously post your opinions with no substantiation, even when repeatedly asked to do so. You need to realise that your opinions are worthless without evidence and valid reasoning. Your posts are woefully lacking in both.

Brian H | 10 augustus 2016

Discussing % market share, EM one observed that his ambition this decade was to get next to the decimal point.

Mike83 | 10 augustus 2016

An expected 100,000 orders for the M3 became a 400,000+ order. One needs to spend money to speed up the process but the rewards will be great. Powerwalls and Powerpacks are additional revenues which few have included.
The shorts will have a tough time in the near future IMHO

Tesla-David | 10 augustus 2016

@Mike83 +1, couldn't agree more! ;0)