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My thoughts on GF3 Model 3 and $TSLA's future plans for the Asia-Pacific region THREAD
The Chinese market consumed 2.8M luxury cars in 2019, and the segment has been growing between 7-8% annually. Approximately 40% of this market can be served by the Model 3.
My thoughts on GF3 Model 3 and $TSLA's future plans for the Asia-Pacific region THREAD
The Chinese market consumed 2.8M luxury cars in 2019, and the segment has been growing between 7-8% annually. Approximately 40% of this market can be served by the Model 3.
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Taking $TSLA's M3 2019 US market share and applying it to China yields a yearly demand of about 250k M3's/yr. This demand can grow if $TSLA can get a higher share of the market, or if the market keeps growing as it has in the past.
Taking $TSLA's M3 2019 US market share and applying it to China yields a yearly demand of about 250k M3's/yr. This demand can grow if $TSLA can get a higher share of the market, or if the market keeps growing as it has in the past.
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Another important consideration is that China's market is big enough to support many varieties of the Model 3. Currently, only the SR+ and LR RWD variants are MiC. Performance is next. I believe $TSLA will also start to make the AWD LR M3 variant in China in 2021.
Another important consideration is that China's market is big enough to support many varieties of the Model 3. Currently, only the SR+ and LR RWD variants are MiC. Performance is next. I believe $TSLA will also start to make the AWD LR M3 variant in China in 2021.
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Back to production. Let's start with 250K/yr. This would require a sustained production of around 5.5k Model 3's per week at 48 weeks/yr.
Fremont's best quarter for Model 3 production was 6.6k/week (Q419). However, we know that the Fremont factory is not optimal.
Back to production. Let's start with 250K/yr. This would require a sustained production of around 5.5k Model 3's per week at 48 weeks/yr.
Fremont's best quarter for Model 3 production was 6.6k/week (Q419). However, we know that the Fremont factory is not optimal.
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GF3 was designed in a much more streamlined way that should support much higher capacity.
6.6k/week is therefore conservative. GF3's M3 max capacity is probably 8-10k/week. Let's use the low end to be conservative.
GF3 was designed in a much more streamlined way that should support much higher capacity.
6.6k/week is therefore conservative. GF3's M3 max capacity is probably 8-10k/week. Let's use the low end to be conservative.
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At 8k M3's produced/week, GF3 has excess M3 production of 2.5k/week. Where do these units go? IMO, GF3 will service the Asia Pacific region once Chinese demand is served.
At 8k M3's produced/week, GF3 has excess M3 production of 2.5k/week. Where do these units go? IMO, GF3 will service the Asia Pacific region once Chinese demand is served.
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When will this happen? GF3 aims to hit 4k/week sustained production in June 2020. To get to 8k/week, we are probably looking at at least another 6-8 months. My best estimate is Q1-Q2 2021. The implications of this are very important and a big part of my bull thesis for $TSLA:
When will this happen? GF3 aims to hit 4k/week sustained production in June 2020. To get to 8k/week, we are probably looking at at least another 6-8 months. My best estimate is Q1-Q2 2021. The implications of this are very important and a big part of my bull thesis for $TSLA:
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Simplified logistics and faster time to market. No longer will $TSLA need to send RoRo ships from Fremont to Asia. This will both de-risk/simplify the logistics for $TSLA, and free up Fremont M3 capacity so that Fremont can focus on NA and Europe.
Simplified logistics and faster time to market. No longer will $TSLA need to send RoRo ships from Fremont to Asia. This will both de-risk/simplify the logistics for $TSLA, and free up Fremont M3 capacity so that Fremont can focus on NA and Europe.
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This will be key as GF4 will initially build Model Y, not Model 3.
Profit. It's clear that when GF3's supply chain is fully sourced from the domestic market, $TSLA will be able to unlock the full benefit of scale and cost reduction.
This will be key as GF4 will initially build Model Y, not Model 3.
Profit. It's clear that when GF3's supply chain is fully sourced from the domestic market, $TSLA will be able to unlock the full benefit of scale and cost reduction.
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Tesla MiC Model 3's will cost significantly less to manufacture than those from Fremont.
So what's next? Here are my predictions:
- Late Q3 or early Q4 2020 production start of MiC Performance M3 at GF3.
- Q1 or early Q2 2021 launch of AWD LR M3.
Tesla MiC Model 3's will cost significantly less to manufacture than those from Fremont.
So what's next? Here are my predictions:
- Late Q3 or early Q4 2020 production start of MiC Performance M3 at GF3.
- Q1 or early Q2 2021 launch of AWD LR M3.
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Take this same timeline and logic and push it out 1 year = this is what Tesla will do for Model Y, too. Organic Model Y demand in China is around 350k/yr.
Once $TSLA has advanced the Model 3 and Model Y projects, look out for the GF3 Model 2 in 2022.
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Take this same timeline and logic and push it out 1 year = this is what Tesla will do for Model Y, too. Organic Model Y demand in China is around 350k/yr.
Once $TSLA has advanced the Model 3 and Model Y projects, look out for the GF3 Model 2 in 2022.
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