Tesla’s progress to 200k US deliveries & Federal Tax Credit Phaseout OFFICIALLY STARTS 1/1/19

Brokedoc

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#1
Now that it appears that the Federal EV Tax credit will be preserved, we need a new thread to monitor Tesla's progress to the critical 200k US delivery mark. This determines when the tax credit will start tapering and will affect the credit that we receive as buyers of the Model 3. As we get more hard numbers towards the 200,000 number, I will update this original post accordingly.

Facts:
For reference: http://www.fueleconomy.gov/feg/taxevb.shtml

Every buyer of a qualifying NEW EV receives a $7,500 tax credit during the tax year that they purchase and register the vehicle.
Once a manufacturer reaches 200,000 qualifying EVs delivered in the US, the full $7,500 tax credit will continue for the remainder of that quarter and extend into the quarter following.
Then, buyers of qualifying EVs from a manufacturer in the phaseout period will receive 50% ($3,750) tax credit for the following two quarters (6 months)
Then, buyers of qualifying EVs from a manufacturer in the phaseout period will receive 25% ($1,875) tax credit for the following two quarters (6 months)
Then, buyers of qualifying EVs receive no tax credit thereafter.

PLEASE KEEP IN MIND that the date Tesla hits 200,000 is not as critical as how many Model 3s are being produced at that point and the several months after. In other words, the production ramp at the time of 200,000 is much more important than the actual point 200,000 is reached. Model 3 buyers will continue to get some amount of tax credit for the remainder of the quarter that 200,000 is reached AND an additional 15 months after that quarter (3 months at 100%, 6 months at 50% and 6 months at 25%)

Tesla is known to have produced 127,000 Qualifying EVs through August of 2017.
Tesla reports quarterly production with every quarterly financial report and shareholder conference. This number for 2017Q3 (July-Sept) was 26,150 vehicles but this number is GLOBAL deliveries. Tesla doesn't break down US vs International deliveries publicly.
For reference: http://ir.tesla.com/releasedetail.cfm?ReleaseID=1042449

We might estimate 50% US but local tax incentives in certain countries have certainly had an impact on demand in various countries so the US delivery percentage can fluctuate greatly.

My current guesstimate is that Tesla is at about 150,000 at the end of 2017 due to Model 3 delivery of less than 2,500 units for 2017. I do not expect Model S/X production or demand to change by much in 2018. THE TRUE VARIABLE is how quickly the Model 3 ramp occurs.

USING MY MASSIVE ASSUMPTIONS, Model S/X US deliveries continues at roughly 12,500 per quarter and we average 1,000 Model 3s per week for 2018Q1, I guesstimate 175,000 by the end of 2018Q1. Even if Tesla ramps to 2,000 Model 3s during 2018Q1, we still reach the tantalizingly close 187,000 at the end of 2018Q1. Thereafter I assume 2,500 weekly model 3s in Q2 so we will hit 200,000 during 2018Q2. Therefore, $7,500 continues through 9/30/18, $3,750 continues through 3/31/19, and $1,875 continues through 9/30/19. Of course, if the ramp increases or decreases, these projections will change.

Perhaps Tesla can ramp up to 5,000 Model3s per week by 2018Q3 in which case almost every US preorder could potentially get the full $7,500 tax credit. If a reservationist waits for dual motor or performance package that will be released later in the year, they would qualify for less of a credit.


*** UPDATE 1/3/18
2017Q4 update released by Tesla

http://ir.tesla.com/releasedetail.cfm?ReleaseID=1053245

As usual, Tesla did not break down U.S. vs International Deliveries. We know 127,000 US deliveries through end of August 2017. One extra month of U.S. deliveries approx. 6,500 for the end of quarter push would be 133,500 by end of 2017Q3. Global Q4 deliveries is 28,320 MS/MX plus 1,550 M3. I am assuming higher percentage of U.S. MS/MX sales for Q4 due to the potential end of the Tax Credit fiasco which would bring U.S. deliveries to approx. 155,000 by the end of 2017

Tesla has now projected GRADUAL M3 ramp from <1k/wk now to 2,500/k by the end of 2018Q1. Even generously assuming average of 2k/wk for 2018Q1 and continued MS/MX deliveries (without Osborne effect), then end of 2018Q1 would be at 191,000. This CLEARLY puts a delay to the phase out of the Federal Tax credit as the threshold will happen during 2018Q2.


NEW PREDICTION

Before 10/1/18
Full $7,500 Tax Credit

10/1/18-3/31/19
$3,750 Tax Credit


4/1/19-9/30/19
$1,875 Tax Credit


After 10/1/19
No Credit


*** UPDATE 2/9/18

There were no new production numbers released by Tesla during the recent Financial Update Conference Call so there are no hard changes in the above base scenario. HOWEVER, the Canadian Estimator has now been updated to provide clues that First production and AWD will be available in "Mid 2018" which is even earlier than my 3/31 Owner Reservation showing AWD as "Late 2018". I waited two days to make sure this was not a mistake by Tesla and no corrections have been made so presumably this is their accurate rollout plan.

Despite acknowledged bottlenecks, Tesla has maintained Model 3 forward production ramp guidance of 2500/wk by end of 1Q2018 and 5000/wk by end of 2Q2018. With possible distribution of produced cars to Canada and the decreased S/X production due to the diversion of resources to the Model 3 line, there is a very real possibility of Tesla crossing the 200k U.S. Delivery threshold in 3Q2018.


I am continuing my previous assumption of 155,000 U.S deliveries by the end of 2017 and adding a revised DECREASED MS/MX US deliveries estimated at 12,500 for 1Q2018. I am also estimating a total Model 3 1Q2018 U.S. delivery of 10,000 at most. Current production is limited to GF1 battery production rate of an apparent 500/wk. New production robots are reportedly enroute to Nevada but will need to be reassembled, tested, and production quality validated prior to ramping. That will raise my new cumulative U.S. Delivery projection to 177,500 by end of 1Q2018 .


Resuming normal MS/MX US production/deliveries for 2Q2018 will be about 15,000 and that will push the total US deliveries to 192,500 excluding Model 3 2Q2018 deliveries. IF Model 3 production gets diverted to Canada as it appears they are planning, IT IS VERY EASILY POSSIBLE for Tesla to cross 200k during the first week of 3Q2018. In which case I estimate an ADDITIONAL 70,000 U.S. Tesla customers would receive the FULL tax credit and conceivably ALL current reservation holders would receive at least the 50% credit.


I am adding an alternative Federal Tax Credit Phaseout scenario if the 200k U.S. delivery level occurs 3Q2018.


*** Update 2/21/18 ***
Elon apparently Tweeted in APRIL 2016 that Tesla may try to time US delivery 200k to benefit customers despite corporate revenues.


TAX CREDIT PHASEOUT FOR 3Q2018 200k Delivery


Delivery Before 1/1/19
Full $7,500 Tax Credit

1/1/19-6/30/19
$3,750 Tax Credit


7/1/19-12/31/19
$1,875 Tax Credit


Delivery After 1/1/20
No Credit


***UPDATE 5/7/18

So I'm going to make one final update to my OP with this statement:

Barring a meteor falling on Fremont, Tesla will hit 200k either end of Q2 or beginning of Q3. Only Tesla knows the real timing.

Statistically, Q2 is more likely but with the 5 day Model 3 production halt last month with a total 10 day production halt scheduled for Q2 and the diversion of production to Canadian deliveries, it is highly possible to cross the 200k threshold in early Q3 with minimal delivery tweaking. It would be very plausible to plan another "scheduled manufacturing pause for efficiency updates" during June also.


TAX CREDIT PHASEOUT FOR
2Q2018 200k Delivery.............................3Q2018 200k Delivery

Before 10/1/18..............................................Delivery Before 1/1/19
Full $7,500 Tax Credit.................................Full $7,500 Tax Credit

10/1/18-3/31/19.............................................1/1/19-6/30/19
$3,750 Tax Credit........................................$3,750 Tax Credit


4/1/19-9/30/19.................................................7/1/19-12/31/19
$1,875 Tax Credit..........................................$1,875 Tax Credit


After 10/1/19...................................................Delivery After 1/1/20
No Credit........................................................No Credit


*** FINAL EDIT 7/12/18 ***


THE OFFICIAL FITC TAPER SCHEDULE HAS BEEN POSTED BY TESLA TO REFLECT THAT THEY CROSSED 200K IN Q3 2018. I HOPE I NEVER SEE ELON IN PERSON BECAUSE I WILL LOOK REALLY FOOLISH WHEN I TRY TO KISS HIM!

779cb3e5-a876-4485-866e-d99cbbaefc9c-jpeg.11390




 
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Dr. J

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#2
we average 1,000 Model 3s per week for 2018Q1, I guesstimate 175,000 by the end of 2018Q1. Even if Tesla ramps to 2,000 Model 3s during 2018Q1, we still reach the tantalizingly close 187,000 at the end of 2018Q1. Thereafter I assume 2,500 weekly model 3s in Q2 so we will hit 200,000 during 2018Q2. Therefore, $7,500 continues through 9/30/18, $3,750 continues through 3/31/19, and $1,875 continues through 9/30/19. Of course, if the ramp increases or decreases, these projections will change.
So, you are not at all Elon-optimistic? He says Model 3 production reaches 5,000 per week by the end of Q1 2018. Is this interpretation correct: "if Telsa ramps to 2,000 [per week on average] Model 3s during 2018Q1..."? That's about where I would guess it, so hitting stride at 4,000/week at the end of Q1 2018 (almost Elon-optimistic). That still puts the 200,000th US delivery in Q2, right?

Note: hitting 200,000 early in a quarter is good (cause we get nearly 6 months of full credit after that point), but cranking out masses of cars quickly after that point is even better (from a maximum credit availability viewpoint). It's all calendar-based after that 200,000th car.
 

Brokedoc

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#3
So, you are not at all Elon-optimistic? He says Model 3 production reaches 5,000 per week by the end of Q1 2018. Is this interpretation correct: "if Telsa ramps to 2,000 [per week on average] Model 3s during 2018Q1..."? That's about where I would guess it, so hitting stride at 4,000/week at the end of Q1 2018 (almost Elon-optimistic). That still puts the 200,000th US delivery in Q2, right?

Note: hitting 200,000 early in a quarter is good (cause we get nearly 6 months of full credit after that point), but cranking out masses of cars quickly after that point is even better (from a maximum credit availability viewpoint). It's all calendar-based after that 200,000th car.
I’m a complete Elon fanboy but I’m also realistic. Here we are at the end of 2017 and total production is likely to be under 3,000. Even if weekly ramps increase, I’m also fudging temporary hiccups and supply disruptions. Anyone is welcome to take my estimates and move them up a quarter or back a quarter but I think I’m pretty close.

If I could predict the future, I would buy all of us a winning lottery ticket.
 

Troy

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#7
Tesla is known to have produced 127,000 Qualifying EVs through August of 2017.
I'm calculating 132,485 units at the end of Q2 2017. I'm also calculating that they will hit 200,000 USA sales on 1st April 2018.
This is not a joke. It was 26 March 2018 until recently but I updated the Model 3 numbers and now it shows 1st April 2018. Both Q1 2018 and Q2 2018 look equally likely to me. If they hit 200,000 USA sales in Q1 2018, $7,500 will continue for deliveries until 30 June 2018. Otherwise, it will continue for deliveries until 30 Sep 2018. In the first few days of January Tesla will release their Q4 2017 global sales numbers. I will update the calculations after that.

The difficulty is that Tesla rarely publishes their USA sales numbers. We know 2012 and 2013 because at that time Tesla was selling cars only in North America. They publish their global sales numbers and Canada numbers are known. Therefore 2012 and 2013 is not an issue. 2014 and 2015 is not an issue either because Tesla has released USA sales numbers for these two years. After that, they only released USA sales for Q3 2016. Therefore you have to estimate USA sales for other quarters by looking at other data. Global sales, Europe sales, California sales and Canada sales are known. USA sales and Asia-Pacific sales are unknown.

Of course, others might have calculated different estimates. In case somebody wants to compare calculations, feel free to check out columns O, AN and AP here. To me, the situation looks as follows. I will update this in early January.

Pessimistic Scenario, 50% likely (Tesla hits 200,000 USA sales in Q1 2018)
  • $7,500 for deliveries until Jun 30, 2018
  • $3,750 for deliveries until Dec 31, 2018
  • $1,875 for deliveries until Jun 30, 2019
Optimistic Scenario, 50% likely (Tesla hits 200,000 USA sales in Q2 2018)
  • $7,500 for deliveries until Sep 30, 2018
  • $3,750 for deliveries until Mar 31, 2019
  • $1,875 for deliveries until Sep 30, 2019
In case you are wondering how much you might get depending on your delivery estimate, check out the delivery estimator spreadsheet here.
 
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Bokonon

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#8
I’m a complete Elon fanboy but I’m also realistic. Here we are at the end of 2017 and total production is likely to be under 3,000. Even if weekly ramps increase, I’m also fudging temporary hiccups and supply disruptions. Anyone is welcome to take my estimates and move them up a quarter or back a quarter but I think I’m pretty close.
I naturally gravitate toward overly-optimistic forecasts, but I am inclined to agree with these estimates as being in the ballpark.

At some point in Q1 (or Q2?), they are going to start producing the base configuration, and in Q2, they are going to start producing AWD. Back when the Model 3 page had the S-curve graph for First Production, it stated that the production ramp for the base/AWD configurations would follow a similar S-curve. Unless Tesla has figured out how to bring these configurations online gradually without disrupting the existing First Production line running at full-bore, I would imagine that weekly production rates will take a short-term hit as Tesla integrates the additional configurations into the manufacturing process.
 

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#9
Elon is no dummy. As I suspect they are stacking deliveries to be able to claim 1000 deliveries in the last week of Dec, I also suspect that if 200k looks to be close to the end of March 2018, he can just as easily stack a few to be delivered the 1st week of April so that 3 more months of customers benefit from the tax credit timing. Or he can decide to begin delivery to Trevor in Canada in March so that a few thousand less get delivered to U.S. customers at the end of March.

More than a few weeks and it may raise regulatory eyebrows but it would be entirely plausable if Elon announced “temporary production inefficiencies”.
 

NOGA$4ME

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#10
So, you are not at all Elon-optimistic? He says Model 3 production reaches 5,000 per week by the end of Q1 2018.
Elon originally said 5000 per week as of December 2017....

Now to be fair, it's actually the rest of the Tesla management team that claimed 5K/week as of the end of 1Q18, so we don't have to take that with quite as large a grain of salt. Elon said they would be in the "multiple thousands" per week by the end of December. Only with some gamesmanship will they actually hit that.

Having said all that, first week of April is my guesstimate. If things go well, they could hit in the last 2 weeks of March (again, my guesstimate) but they won't pass that milestone with only 2 weeks left in the quarter. They will delay and hit it at the beginning of the quarter.
 

roflwaffle

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#11
Elon originally said 5000 per week as of December 2017....

Now to be fair, it's actually the rest of the Tesla management team that claimed 5K/week as of the end of 1Q18, so we don't have to take that with quite as large a grain of salt. Elon said they would be in the "multiple thousands" per week by the end of December. Only with some gamesmanship will they actually hit that.

Having said all that, first week of April is my guesstimate. If things go well, they could hit in the last 2 weeks of March (again, my guesstimate) but they won't pass that milestone with only 2 weeks left in the quarter. They will delay and hit it at the beginning of the quarter.
Did Elon even say "multiple thousands" per week? I remember the "multiple thousands" part, and when asked about that he didn't elaborate, which I took to likely mean per month.
 

garsh

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#12
Optimistic Scenario, 50% likely (Tesla hits 200,000 USA sales in Q2 2018)
  • $7,500 for deliveries until Sep 30, 2018
Why'd you have to go and post that?
Now you've got me thinking about waiting for dual-motor! :mad:
(delivery estimator shows dual-motor in Aug-Oct for me)
 

NOGA$4ME

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#13
Did Elon even say "multiple thousands" per week? I remember the "multiple thousands" part, and when asked about that he didn't elaborate, which I took to likely mean per month.
I did misquote him slightly, but that is definitely what he said....here are the relevant parts of the earning call transcript, snipped for brevity, but you can read the whole dialog here: https://seekingalpha.com/article/41...-results-earnings-call-transcript?part=single

EDIT: And you are right, that James Albertine did look like he was going to ask for clarification on the "per week" part and Elon cut him off with just the word "thousands" without clarifying the time frame, but I'm pretty sure Elon was being optimistic Elon at this point and meant per week. Realistically I think this probably means just over a thousand/week CAPABLE by the end of the year, but they probably won't have their first actually >1000 week until the first or second week 2018.

James J. Albertine - Consumer Edge Research LLC
...
And then maybe as an aside, can you tell us where you are today on a production per week basis and where you expect to be by the end of 2017, just so we can get an idea of the ramp? Thanks.
...

Elon Reeve Musk - Tesla, Inc.

...

I mean, (17:12) by the end of the year, it will be in the thousands. It's well advanced. Yeah. Yeah.
James J. Albertine - Consumer Edge Research LLC
I'm sorry, well into the thousands per...
Elon Reeve Musk - Tesla, Inc.
Yeah. In the thousands by the end of the year.
 
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danzgator

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#14
PLEASE KEEP IN MIND that the date Tesla hits 200,000 is not as critical as how many Model 3s are being produced
I completely disagree with this. If Tesla hits 200k the first day of a quarter it will maximize the number of customers receiving the full tax credit, because full tax credit will last almost a full 6 months. If Tesla hits 200k the last day of a quarter, it will minimize the number of customers receiving the full tax credit, because it will only run for 3 months. Regardless of whether Tesla is producing 2k, 3k, or 5k Model 3's per week when it hits 200k, it will lose will lose 26k, 39k, or 65k full tax credits respectively, if it reaches 200k the last day of a quarter. Therefore, if Tesla wants to maximize the number of customers that get the full tax rebate, it HAS to reach 200k as close as it can to the beginning of a quarter. Even if that means stockpiling a few hundred, or maybe even a few thousand cars, at the end of a quarter to achieve that. It may make shareholders upset that quarter, but it is better for Tesla long term and all of its customers, if it does this.
 

garsh

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#15
PLEASE KEEP IN MIND that the date Tesla hits 200,000 is not as critical as how many Model 3s are being produced at that point
I completely disagree with this.
Brokedoc is correct. The date is important, but it's not nearly as important as the production rate. Read the following post:
We (as a group) seem to focus in on when the 200,000th delivery will take place. That is important, since timing it "just right" results in an additional 3 months worth of sales qualifying for credits. But it's actually not the most important thing to focus on.

What's more important is for Tesla to very quickly ramp up production. If they time the 200,000th delivery perfectly (beginning of a quarter), but only manage to ramp up to 1000 cars/week, then that would result in:
  • 24,000 people getting $7500 credit (6 months)
  • 24,000 people getting $3750 credit (6 months)
  • 24,000 people getting $1875 credit (6 months)
On the other hand, even if they time the 200,000th vehicle delivery as poorly as possible (end of a quarter), BUT they are able to quickly reach 4000 cars/week, then we get:
  • 48,000 people getting $7500 credit (3 months)
  • 96,000 people getting $3750 credit (6 months)
  • 96,000 people getting $1875 credit (6 months)
So, production ramp-up is MUCH more important if Elon is trying to get rebates for as many reservation holders as possible, moreso than the cutoff date. I think Tesla will delay a few days worth of deliveries if they're on target to hit the cutoff at the end of a quarter, but I don't expect them do anything more drastic than a few days. They'll concentrate on ramping up production instead.
 

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#16
It is obvious that both production rate and timing of the 200,000th car are both relevant to the discussion. If they break the 200K mark on the first day of a quarter but are producing only 1000 cars per week that would provide full credit for some 24,000 customers. On the flip side, if they hit the 200K mark on the last day of a quarter but are producing 5,000 cars per week that would provide full credit to some 60,000 customers. Both have an impact and I would suspect something in between these two scenarios to be what actually plays out.

Dan
 

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#17
Brokedoc is correct. The date is important, but it's not nearly as important as the production rate. Read the following post:
That assumes an abysmal ramp up. If we are all assuming that Tesla will hit +/-5k/week by end of Q1, as Elon predicted, or even sometime in Q2; and we all think that Tesla is not hitting 200k until Q2 at the absolute earliest, and more likely Q3, or even Q4, then the ramp up issue will already be behind us when Tesla hits 200k. IF Tesla gets nowhere near what it committed and is still making 1k-3k a week in Q3-Q4 when it hits 200k, then yes, you are correct, the focus on ramp up would be important. I'd still argue that you'd want to hit 200k deliveries at the beginning of the quarter though. It's not like the two are mutually exclusive. You don't have to sacrifice one for the other. I'm not saying Tesla should sandbag production in order to hit 200k at the beginning of the quarter. You go balls out on production regardless of when you think you're going to hit 200k, you just don't deliver the 200,000th car until the beginning of the quarter.
 

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#18
...Therefore, if Tesla wants to maximize the number of customers that get the full tax rebate, it HAS to reach 200k as close as it can to the beginning of a quarter. ...
And even if you take out "do the right thing for the customers" altruistic factor (which I do believe is in play), then from a simple business perspective, by delaying #200K into the beginning of a quarter, that means you will have one less quarter of headwind against the competition (that really means GM at this time, since the rest of the field is at least a year behind at this point).
 

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#19

garsh

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#20
That assumes an abysmal ramp up.
That was just a very simplified example to demonstrate why production rate is much more important than the cutoff date.
I'm not saying Tesla should sandbag production in order to hit 200k at the beginning of the quarter.... you just don't deliver the 200,000th car until the beginning of the quarter.
I'm sure Tesla will attempt to do so. Elon has hinted that they would do so. But if it turns out that they're going to hit that delivery milestone early in a quarter, I don't think they can stash away 2-3 months worth of cars. That could be (10 weeks * 5000/week = ) 50,000 vehicles. Tesla needs the revenue in a bad way.