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. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Sunday, May 13, 2018

Tesla suppliers starting to see higher volumes from Model 3

From Electrek:

JL Warren Capital, an equity firm based in China tracking local suppliers, has seen “encouraging signs” in Tesla’s supply chain (via Bloomberg):

“Suppliers for the electric vehicle maker’s more affordable sedan have started seeing increased orders, the research firm said in a note to clients. SAS Automotive, a German cockpit manufacturer and assembler with one plant in California, ordered 20,000 display screens for the Model 3 in May, and 10,000 in June from a sole producer in China, according to the research firm.”

The firm says that the supplier is preparing 58,000 vehicles during the third quarter or about 5,000 per week, which is Tesla’s projected production exit rate in the second quarter.

The Model 3 production ramp has suffered delays and it has been difficult on Tesla since they have invested in the production of 5,000 vehicles per week, but they have been falling short of that goal for months now.

But it’s also difficult on Tesla’s suppliers who have also invested in production capacity increases to respond to the demand.

[Read more here]

Bloomberg's Tesla model 3 tracker agrees.


The Model 3 tracker has fluctuated a lot over the last three or four weeks, thrown by the closing of the assembly lines at the Fremont and Nevada gigafactory for upgrades and by a huge jump in VINs issued to Tesla which the computer algorithm at first thought was an outlier:

Our Model 3 Tracker is in flux. We've had a flood of VINs reported to Bloomberg from new Model 3 owners since late last week. The highest reported VINs jumped by almost 10,000, to about 30,000 over the course of a week. Of course, we know that such a jump far exceeds Tesla's current production capabilities, which Elon Musk discussed during the earnings call last week.

We initially weren't sure what to make of this development, as there was a gap in the typical distribution of reports, where several thousand VINs were apparently skipped before production resumed. Our model initially considered these higher VINs as outliers and ignored them entirely.

As more VINs came in, it soon became clear that these were not outliers but that Tesla had skipped an unusually large block of VINs when it resumed production from its reported factory halt. The jump could be related to the production halt, to the coinciding start of deliveries in Canada, or any number of other factors.

We're not sure yet what this will mean for the tracker. It's possible that the Trend feature might see large volatility swings in the next few weeks, as the model seeks Tesla's new equilibrium. While we don't think the gap should affect the model's long-term accuracy, we're testing a feature that would remove gaps of a certain size from consideration, to avoid unnecessary volatility in the future.

One thing our model suggests is certain: Tesla has resumed full production in Reno and Fremont and may already be testing new levels of weekly production.

[Read more here]

I have no doubt that Tesla will reach its Model 3 production goals of 5000 a week by end June.  Even if it's just for one week.  And I am confident it will reach 7000 a week by the end of the year, though the growth rate from now on is likely to slow.  This sales level will take the Model 3 into the top 10 car models sold in the USA in Q4 2018.  (Number 10 in this ranking, the Ford Escape, is running at 5000 per week) Not bad for a company which was unknown 8 years ago and which pioneered a totally new driving technology.  

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