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Why would Tesla release a semi before a Model Y??

Discussion in 'Speculation' started by Blaine Havens, May 6, 2017.

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  1. Blaine Havens

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    I thought it was extremely interesting that Tesla won't be making the Model Y before the semi. wouldn't they want to make a mass market vehicle to make more money to then fund the semi? Does anyone think the same thing?
     
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  2. Watts4me

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    I feel the same way you do. But I speculate that if the model Y would be released a year from now they will have a ton of reservation again to fill. They would have to build another line to build just that. IMO Tesla is not big enough yet to pull it off yet.
     
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  3. Bokonon

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    Initially, I wondered the same thing when Elon said that the semi truck would be unveiled later this year while suggesting that Model Y was still a few years away. However, I think the Q1 2017 earnings call cleared a lot of this up for me.

    Most significantly, Elon mentioned that the Model Y would be built on a brand new platform, rather than piggybacking on the existing Model 3 platform, as he had stated previously. This change of plans almost certainly accounts for a large part of the "delay"
    (relative to popular consensus) in bringing Model Y to market.

    Why the change? Well, given the level of detail that Elon shared about Model Y on the call -- and his apparent eagerness to share it -- my guess is that Tesla has performed a lot of the nuts-and-bolts engineering-design work on the Model Y over the past quarter or two, and at some point they made the determination that a new platform for the Model Y would produce better results -- both in terms of product quality and manufacturing efficiency -- than simply building it on the Model 3 platform.

    Meanwhile, in parallel, the Tesla Semi design team appears to have determined that they could bring an electric semi-truck to market using components and infrastructure that Tesla is either already producing (e.g. "a bunch of Model 3 motors") or will be releasing in the near future (e.g. Supercharger v3 with power output well in excess of 350 kW). In other words, the "platform" underlying the semi-truck is probably farther along than the Model Y's new platform.

    All of that said, just because Tesla "unveils" the semi truck this fall and won't unveil the Model Y for another year or two doesn't necessarily mean that semi deliveries will start before Model Y deliveries... but based on what we know now, that seems to be the plan. I would be shocked if the semi unveiling didn't include a "Deliveries begin..." bullet point.
     
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  4. Guy Weathersby

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    This is just a wild groundless guess, but I think the Model Y needs a highly automated assembly line to produce it in the required quantity (the same is true for the pickup truck}. So they need to wait for excess capacity at Freemont or, more likely, a new Gigafactory. A semi might initially at least be produced in 100s rather than 100s of thousands, and so would not require massive automation. My hunch is that Tesla has located an existing plant which can quickly be converted to a semi production line.

    Short answer - - they have nowhere to build the Model Y, but they might have a place to build a large truck.
     
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  5. Safe Daddy Driver

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    @Blaine Havens I was wondering the same thing...

    Based on pure speculation, my feeling is that the Model Y project has been refocused to be all about highly automated manufacturing "product" AKA the machine that builds the machine, AKA the Model Y Factory, which would ramp up vehicle production to over 1 million units per year by 2020.

    The semi could yet be another significant source of funding for this huge project, and who knows what else Tesla is up to.

    From a marketing standpoint, a semi tug-of-war showdown would help raise awareness about the superiority of Tesla drivetrains, and hopefully be the nail in the coffin for ICEVs. Targeting potential buyers of the Tesla pickup comes to mind. (BTW isn't anyone excited to watch that uphill tow, with the ICE truck wheels screeching?)

    To add to @Guy Weathersby's case for manufacturing the semis first, Tesla may already have the battery manufacturing segment highly automated (part one of the MTBTM?) that IMO, despite the extra large battery pack requirement, they could sell a whole bunch of semis to the Walmarts of the world with high profit margins.

    They could sell the Model Y sooner by sharing the Model 3's platform, but with minimal profit margin. Perform some major overhead for another year or two, and Tesla would have learned to spew Model Ys out of a factory like Twinkies.
     
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  6. Blaine Havens

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    I guess that this makes sense. Elon mentioned at TED the the Tesla Semi could actually pull a normal semi up hill while they are doing a tug of war. I bet that there will be some kind of special feature (maybe even price) that will make the Tesla Semi an absolute no brainer for anyone. I guess we will find out soon enough though...[/QUOTE]
     
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  7. BigBri

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    I'd speculate demographics. Guys that buy trucks aren't usually the most ecofriendly. Think of the gruff contractors and roofers you see driving those massive V8 pickup trucks. Thats a hard sell. There is certainly a market for electric trucks and its growing but not quite there yet. Wait a year or two when there are hundreds of thousands of Model3s on the road and people are starting to get that EVs don't really have downsides.

    Semi trucks on the other hand are more apt to be bought by large trucking companies and corporations. If you can show them the savings that driving an electric semi could bring ontop of its capabilities then I'd imagine it'd be a pretty easy sell as corporations speak in dollars and cents. They probably don't care about saving the world but if you can save them a buck they'd be all over it.
     
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  8. Badback

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    If you spend some time counting semi trucks on the highway, I would say that they are definitely a mass market vehicle.
     
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  9. Bobby Garrity

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    I think Straubel mentioned in the earnings call (I could be wrong, I haven't listened to it yet) that part of the motivation was that trucks produce a large portion the CO2 output while only being a small portion of the vehicles on the road. So making electric semis is a quick and effective way to cut CO2 emissions.
     
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  10. Gabzqc

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    Almost, it was Elon who said it
     
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  11. SSonnentag

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    Fun Facts:

    There are roughly 1.9 million semi tractors operating in the US
    There are roughly 264 million passenger cars registered in the US
     
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  12. Kbm3

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    Great point. In addition I wonder if having a Tesla semi will give them more macho cred when it comes time for the pick up.
     
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  13. BigBri

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    Totally agree. The bigger the truck the more those guys are into it haha. If they rewrite the trucking industry you can bet your dollar the contractors and guys driving those huge Titan trucks will be all over it.
     
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  14. Bryan Baker

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    Now multiply the CO2 emissions per vehicle by the number of vehicles you just stated, and you'll see the gaping opportunity and moral imperative in starting the transition to sustainable transportation in this important segment, i.e., what Bobby Garrity stated above.
     
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  15. Kbm3

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    Also if Tesla solves the most difficult problem of road transport (e.g. long-range trucking) this will make it a no brainer for others to go after the easier shorter range electric trucking applications like garbage trucks etc.

    This fits with Tesla's goal of accelerating the advent of sustainable transportation by leading the way with the most difficult aspect.
     
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  16. dudeman

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    I think they are doing lot of new stuff with Y - lot of innovation with electric system etc. It will not be ready to launch before truck.

    Truck can be launched earlier than Y and produced also as it probably does not need as big factory as Y.

    Bring Semi to the market and letting it run in the wild changes perception about electric pick up truck.
    When pickup truck will be ready to roll, market will be eagerly waiting with proven heavy duty EV drives.
    Pick up is where big three makes ton of money. Tesla has their eye on that market as well. Semi is a good perception changer there.
     
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  17. EValuatED

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    Based on some of Elon's Tesla Semi comments when he splashed the news, sure sounded like he was saying they had some serious customer buy-in. Some commitments could be driving priorities.
     
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  18. Gorillapaws

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    Here's my best guess: I think they want to delay Y production for multiple reasons.
    1. Tesla has to focus on the Model 3 production ramp. If this isn't executed correctly the company could go under.
    2. Just by hinting at jumping into this market, Elon is going to spur traditional truck makers to at least begin to think about EV's and that could help accelerate the transition to sustainable transport.
    3. This is a bit tinfoil, but I think there may be issues with Tesla's new batteries. Perhaps back 2016 when they did the Model 3 reveal, they expected battery prices to fall faster than they actually did, or they were working on chemistries that ended up not being ready in time. I'm thinking they may need a bit more time to get the batteries in the Gigafactory to where they want them from a price/performance standpoint. This is pure speculation admittedly, but if true the Semi would be a good way to keep momentum moving forward on EVs without needing to do a large rollout with pricing dependent on massive economies of scale, and a complicated production facility being created for the product to be viable.
    4. Financing. TSLA is not in fantastic shape financially. They are deeply in debt and need to prove that they can generate large returns for stockholders. I believe the Model 3 can do this for them, but it's going to take a year or two before we see their profits materialize via economies of scale. If they can achieve this, then securing financing for further expansion will be much easier.
     
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  19. Fun_for_the_grandkids

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    I don't agree with the premise that Tesla want to delay Y production. Originally 2020 was mooted but more recently late 2019 has been mentioned for start of production. Unmet affordable EV demand is massive and I believe that Tesla want as much of the action as possible. With respect to your 4 comments:

    1. Totally agree. Model 3 focus is "do or die".
    2. Tesla is very strategic in what it does and the semi is no exception. I'm with @EValuatED, post #17, that there is buy-in for this product and this is for real. I also agree with you that starting big may be aimed at changing perceptions. To enable entry to the profitable pickup market in 2 or 3 years?
    3. Evidence with respect to batteries suggests reverse. Don't offer to build a 100 MW battery in 100 days if you are having production problems. Don't then add to you woes by building battery-eating semis. In fact, it is because of Tesla's battery cost AND availability advantage that they are able to build the Model 3 AND grid-scale storage AND semis. The Bloomberg cost per range comparison shows that the Model 3 is way ahead of the pack.
    4. A small qualification. TSLA's balance sheet is healthy with industry-favourable ratios for both short and long-term debt. For detail see @garsh post #378 in thread $TSLA - Mixed bag of analysts' opinions. However, you're right that Tesla needs to start generating big profits quickly and if they get Model 3 production right they will do that. They are using latent demand strategically to maximise early returns through pricing and option availability policy. That said, shareholders looking for short-term dividends rather than shareholder value should look elsewhere as clearly profits for the foreseeable future will be plowed back into further expanding EV and battery production.
     
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  20. Gorillapaws

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    I mostly agree with the above. You make some excellent points, but I will push back a bit on this part:
    Both the Australia energy deal and the Semi are very different than the affordable EV markets. The semi in particular is much less sensitive to the battery cost as a percent of the overall cost of the vehicle. These are much lower volume, high priced vehicles so if battery prices are 20% greater than where Elon expected them to be last year by now, then Tesla can simply build that extra cost into the price of the truck.

    As an aside, I suspect that Tesla may pursue a battery swapping strategy with the semi project with special stations along major trucking routes. Trucking companies would buy the vehicles without the batteries and pay a monthly fee based on the number of swaps/charges. This would allow semi trucks to "refuel" faster than with diesel--likely for much less cost, and would prevent them from clogging up supercharger stations for extended periods of time. This is pure speculation on my part.

    The Australian energy project is also not as sensitive to price as the affordable EV market. It's a massive government project with few competing solutions. Tesla probably has some wiggle-room on the pricing for that deal.

    I think it's possible that Musk was expecting the Model 3 to have more kWh than they were able to deliver in the initial rollout. The aero wheels feel like something that was done later as a means to boost the range (and average selling price) to exceed the promised 215 miles of range (just barely) while maintaining the magic $35k number. It feels like the numbers weren't quite where they wanted them to be on cost (or weight or efficiency) but they knew they couldn't delay the release and had to hit the $35k price point. I think they want another year or two for their battery tech to improve before releasing a bigger, heavier and less efficient (from a coefficient of drag standpoint) affordable SUV. Tesla knows the demand for the Y will be off the chart, they probably need time to execute that properly. The battery price/performance ratio will be critical for making a 200+ mi range SUV for under $50k--or somewhere thereabouts.
     
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