"A first principles physics analysis of automotive production suggests that somewhere between a 5 to 10 fold improvement is achievable by version 3 on a roughly 2 year iteration cycle. The first Model 3 factory machine should be thought of as version 0.5, with version 1.0 probably in 2018."What that really means: Tesla is going to lose a ton of money per car on the Model 3, or raise the price, until at least 2022. That's realistic. His two top production guys quit when he announced 2018 as the delivery date for the Model 3. His new production head, from Audi, may have given Musk a reality check.
Tesla produced about 50,000 cars in 2015 with 13,000 employees, about 4 cars per employee. Ford produced 3.2 million cars in 2015 with 187,000 employees, about 17 cars per employee. Toyota produced about 9 million cars with 344,000 employees, about 26 cars per employee. So Tesla needs to get their productivity per employee up by 4x - 7x to play with the big guys. Clearly Musk has done the same calculation.
Now, though, he's admitting that they can't do it by 2018. This is prepping the stockholders for bad financial news. Tesla is going to burn a lot of cash through at least 2022.
There's no reason that Tesla can't get their productivity up to at least Ford levels in time. Ford has a much broader product line, and Tesla's car isn't that complicated mechanically. But it's not instant.
What that really means: Tesla is going to lose a ton of money per car on the Model 3, or raise the price, until at least 2022. That's realistic. His two top production guys quit when he announced 2018 as the delivery date for the Model 3. His new production head, from Audi, may have given Musk a reality check.
Tesla produced about 50,000 cars in 2015 with 13,000 employees, about 4 cars per employee. Ford produced 3.2 million cars in 2015 with 187,000 employees, about 17 cars per employee. Toyota produced about 9 million cars with 344,000 employees, about 26 cars per employee. So Tesla needs to get their productivity per employee up by 4x - 7x to play with the big guys. Clearly Musk has done the same calculation.
Now, though, he's admitting that they can't do it by 2018. This is prepping the stockholders for bad financial news. Tesla is going to burn a lot of cash through at least 2022.
There's no reason that Tesla can't get their productivity up to at least Ford levels in time. Ford has a much broader product line, and Tesla's car isn't that complicated mechanically. But it's not instant.