Testing Tony Seba’s EV Predictions 9 (And Then There Was Tesla)

Not bad! I’ve reached number nine in my series of posts on Electric Vehicles (EVs) and haven’t done a post yet concentrating on Tesla. There are two main reasons for this. First, so much has been written about Tesla, and so many opinions are publicly available on the web about Tesla, that I am not sure I can add much.

Second, this is a series of blog posts looking at the question of whether EV penetration can realistically get to 95% in 2030, which roughly equates to around 130 million vehicles. Even if Tesla becomes the most successful auto company ever–or even if it becomes the most successful auto company ever multiplied by a factor of two–it alone cannot get even close to that target of 130 million EV sales. Let us say that in 2030 Tesla has the combined market share that Volkswagen and Toyota have today (the top two in terms of global autos sales market share). That combined VW-Toyota percentage share of the market now would equate to Tesla selling about 30 million cars in 2030. Pretty bloody good (if it ever happens), but it will not get us even close to 130 million EVs. For that to happen we need the collective heft of the rest of the global auto players.

Nonetheless, in our S-curve analysis we started by looking out 5 years, since battery plant and auto lines need to be financed and designed now in order for cars to roll off out in sufficient quantity in 2023. So let’s recycle this chart again:

EVSalesto2023

 

In my post on China’s New Energy Vehicle (NEV) strategy, I surmised that it would be relatively easy for China to hit its target of having 5 million NEVs (made up almost entirely of EVs rather than fuel-cell vehicles) on the road by 2020. That would see Chinese consumers buying around two million EV vehicles that year. My next question is whether Tesla, as the current world’s largest seller of EVs, could supply a large chunk of the other 3.6 million EVs needed in 2020 to stay on Tony Seba’s S curve. My answer to that is “possibly”. Here’s how.

First, Tesla will have enough batteries. From the press release accompanying their January 2017 investor event relating to their factory in Nevada:

“Gigafactory 1 (GF1): GF1 is the world’s leading battery production facility, maintaining high efficiency and output while achieving the lowest capital investment per gigawatt hour (GWh) and the lowest production cost per kilowatt hour (kWh).

The factory will produce cells, battery packs, energy storage products and vehicle components. Phase 2 construction, currently underway, will support annualized cell production capacity of 35 GWh and battery pack production of 50 GWh. The cell capacity represents more than the 2013 total global production of lithium-ion battery cells of all other manufacturers combined and supports the production of about 500,000 cars.”

So in January 2017, battery plant capacity was already being put in place to fit out 500,000 EVs. By 2020, that number will be a lot higher.

Tesla delivered 101,312 Model S and Model X  vehicles in 2017, and Elon Musk has stated his intention to produce 10,000 of the mid-market Model 3 a week by the end of 2018. The press has been rife with stories over how Tesla has been missing its production targets in 2018 for the Model 3, but in April Elon Musk tweeted that production was now exceeding 2,000 per week, which is on top of another 2,000 Model S and Model X vehicles. He then went on to say that they should be producing 5,000 a week of the Model 3 by end June with a stretch goal of 6,000. If we take the 5,000 number add 2,000 Model S plus Model X’s and multiply by 50 we get 350,000 EV sales annualised.

So far, this entire series of blog posts have been dedicated to the supply side; in short, the question of whether the auto manufacturers have put, or will put, enough plant in place to physically build the necessary number of EVs for us to move up Tony Seba’s S curve of EV market penetration versus internal combustion engine (ICE) vehicles. I have said nothing about whether consumers will want to buy a ton of EV cars. In Tesla’s case, however, the demand side is already in the bag for a couple of years since the company has 450,000 reservation deposits for the Model 3 as reported in Tesla’s Q1 2018 results update letter released on 2 May 2018. This really is a case of “build it and they will come”. Moreover, for those who don’t believe that EVs can go mass market look at this chart contained in the same release by Tesla:

MidSizeSedanMarketShare.

Given Tesla will be on an annualised run rate of 350,000 cars by end of June, it looks entirely feasible that this figure will improve to 500,000 by year-end. Then, with the gigafactory in Nevada being scaled up again and more new models to be released over the next two years, it looks likely that Tesla alone could do a third of the 3.6 million vehicle sales needed outside of China to stay on Tony Seba’s S curve through to 2020.

The situation beyond 2020 will be the subject of a separate post, but I want to finish this post by introducing a video by Jack Rickard, an electric car expert, explaining why he thinks Tesla will continue to go from strength to strength. Rickard looks like a Hollywood caricature of an elderly battery nerd, and I will come back to one of his videos where he deconstructs a Tesla battery in a future post.

What I like about Rickard, however, is that he obviously never picked up the book “How to Give a Ted Talk” or, for that matter, any self-help book on presentation style or image branding at an airport book stand. From looking at some of his videos, I have drawn up a Jack Rickard guide to giving a presentation:

  1. Never go to the gym in an attempt to stay in shape: life is too short for such a colossal waste of time.
  2. Dress like you don’t give a shit, because you don’t give a shit.
  3. On the day of your presentation, don’t change your grooming routine since you don’t have one.
  4. When deciding on the length of your presentation, first think of the likely average attention span of your audience. Second, quadruple that number and add a bit more.
  5. Go off at random tangents at great length.
  6. Don’t talk to the camera. Look down a lot and mumble.
  7. Write down your presentation on multiple pieces of paper, then laboriously talk to each page.
  8. Fancy infographics and the like are for morons.
  9. You know your IQ is a lot higher than the vast majority of your audience: communicate that fact to them. Don’t patronise them by letting them think they are cleverer than they really are.
  10. Realise that you can get away with one through nine only because you really, really know your subject.

So here is Jack Rickard spending one hour 50 minutes explaining why Tesla is revolutionising the auto industry, why its competitors are unable to respond and why Tesla’s stock is a screaming “buy”. Enjoy:

 

 

For those of you coming to this series of posts midway, here is a link to the beginning of the series.

One response to “Testing Tony Seba’s EV Predictions 9 (And Then There Was Tesla)

  1. An excellent post, worth reading just for the section on Jack Rickard presentation style 🙂

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