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Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. I do make mistakes, but I try hard to do my analysis thoroughly, and to make sure my data are correct. Remember: the unexpected sometimes happens. The expected does too, but all too often it takes longer than you thought it would.

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Saturday, August 12, 2017

Elon says Model 3 sales could exceed 700,000

Tesla Model 3 (Source)


Elon Musk previously guided demand for Model 3, Tesla’s new mass market electric vehicle, to reach roughly 500,000 vehicles per year. 
Following the launch of the new electric car last month, Musk is now more confident of the demand for the vehicle and he sees it potentially reaching an annual rate of “more than 700,000 units.”

[read more here.  Reminder: Tesla does no advertising.]

By comparison, total EV and PHEV sales in the US are currently running at about 16,000 a month, seasonally adjusted.  So if 100% of Tesla's model 3 sales were made in the USA it would raise EV/PHEV sales four fold, from 1.3% of all car sales to 5.2%.  Elon's 700,000 forecast is probably for global sales.  Seasonally adjusted, global sales are running at 90,000 a month (1.6% of world car sales).  This implies a 64% increase in global EV/PHEV sales just from Tesla, taking the EV sales percentage globally to 2.6%.  But GM's Bolt sales are doing well, Nissan is launching a new longer-range Leaf next month, and China has aggressive EV/PHEV targets, just for starters.  The percentage of EVs/PHEVs is going to rise very rapidly.  By the end of 2019, EV/PHEV sales should have reached 10% of total car sales in the US.

We are at the flexion point for EV/PHEV sales, and in the past when the technology S-curve flexes upwards, the shift to the new technology is very fast.  Think how quickly Kodak went from the world's largest and most famous camera company to bankruptcy.

Will Tesla achieve that kind of exponential growth in production?  Perhaps not.  But even if the targets slip 6 months, EV and PHEV sales are going to explode over the next 5 and 10 years.  And oil demand is going to plunge.

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