Tesla's Production In Q4
Elon Musk has said that Tesla is going to have an epic Q4. I think that means Tesla will have enough production and deliveries in order to reach a 50% year over year run rate. Tesla is going to have to deliver about 474,000 to reach this goal.
That will be a big jump in deliveries. With Giga Shanghai having a reduction in production earlier in the year, reaching a 50% year over year run rate is going to be difficult. Let's look at Fremont first.
Fremont is going to have a production rate of around 150,000. Giga Shanghai is going to be about 265,000 produced. There have been rumors about the Model Y line having production reduced, but we will set that aside for now. Giga Berlin will also have a little more than Giga Texas at around 28,000 vehicles.
Giga Texas will most likely produce around 25,000 vehicles in Q4, 2022 and that gives us a total production number of 465,000, which is about 10,000 less than reaching 50% production year over year, but still just under 50% which is what Tesla has guided for.
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A Push to Reach 50% Production
Tesla won't be able to deliver every vehicle they make, no matter how much they make. There are 30,000 vehicles that weren't delivered last quarter, those can't be forgotten. Those will most likely get delivered in Q4 and there will be a big push to do so.
This will be Tesla's biggest selling quarter. With all the inventory, Tesla is offering a nearly $4,000 incentive discount for people to buy existing Model 3 and Model Y vehicles. This is because consumers can wait until next month to take advantage of the IRA (inflation reduction act).
Tesla won't have any issue selling these cars if nobody bought them this month because of the IRA, but Tesla is still choosing to sell them this month at a discount still. This will cause a logistics rush with these extra vehicles getting bought. Nobody knows what the IRA will end up being like next year though...
It's rare for Tesla to offer discounts, but Tesla is offering incentives and discounts in China too, along with incentives for Tesla Insurance. There are quite a number of discounts just for December, 2022 and this is being done to help Tesla reach their goal for the year, a 50% production rate.
Tesla will sacrifice some margin in order to do this. Tesla will break some of its rules in order to make this big push in Q4, 2022 and I think things will even out more next year when demand increases due to the IRA in the U.S. If China demand is low, Tesla will just export to other areas that have more demand for their vehicles.
Do you think Tesla will reach its 50% year over year production goal? Will Tesla offer more incentives in 2023?
For more information, see this video from Tesla Economist:
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.