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Tesla’s Wild New Forecast Changes the Trajectory of an Entire Industry

Elon Musk’s plan is a really big deal, and not just for electric cars.

Tesla just took the most ambitious automotive production timeline since the Ford Model T and moved it up two years.
The company now plans to produce 500,000 electric cars every year starting in 2018. That’s 10 times the number of vehicles it produced in 2015, and enough to ensure that all 400,000 customers who put down a $1,000 deposit on the forthcoming Model 3 will qualify for a significant U.S. subsidy.
Talk about doubling down—even the original 2020 goal was considered a long shot by Wall Street. This new target would pledge the carmaker to a faster production growth rate than Ford Motor Co. managed in the early 1900s. That’s when Henry Ford pioneered the production line with the Model T, the first mass-market combustion-driven car.
A century later, Tesla Chief Executive Officer Elon Musk wants the Model 3 to be its electric grandchild. He’s now aiming for close to a million sales by 2020.

Tesla is going to be hell-bent on becoming the best manufacturer on Earth,” Musk said during an earnings conference call Wednesday. “My desk is at the end of the production line. I have a sleeping bag and a conference room adjacent to the production line, which I use quite frequently. The whole team is super focused.”

Musk’s enthusiasm aside, skeptics say his planned ramp-up is unattainable in the modern era. If Tesla can succeed—and even Musk admits that it’s a tough goal—it would be a tectonic shift for the global electric-vehicle market, just like the Model T was for the combustion engine
It would reshape the entire global car industry,” said Bloomberg New Energy Finance analyst Salim Morsy. “But a lot of things have to go right, and they have to go right on the extremes.”
BNEF tracked 234,000 electric car sales worldwide last year, of which Tesla made up a fifth of the market, Morsy said. For Tesla to stay on its new track, it would need to produce more cars next year than the entire global electric-car industry made in 2015.
Tesla’s first mass-produced car, the $35,000 Model 3, will need to come to market on schedule, and with great momentum, in late 2017. Telsa’s battery factory in Nevada must flourish, costs must come down, and car-making capacity must scale up at an astonishing rate.
For context: Tesla has never managed to hit one of Musk’s timelines for a new product launch. Not once.

But if Tesla can do it this time, U.S. buyers already waiting in line will benefit from a federal tax break currently valued at $7,500. That subsidy will drop by half shortly after the company reaches 200,000 sales in the U.S., which would take place in 2018, assuming a 50 percent compound annual growth rate. The more cars Tesla can sell that year, the more buyers will benefit from the subsidy.
Here’s an estimate of when that tax break would taper off. If Tesla ramps up in 2017, it could begin to drop sooner, but late-2018 buyers would still get a few thousand dollars
Earlier this year, I made some predictions about how quickly electric automobiles could begin to supplant gasoline-powered cars and upend oil markets. One method I used was based on Musk’s 2020 timeline, which would deliver enough electric vehicles to disrupt fossil fuel use by as early as 2022. If you believe Tesla can reach its new goal, that timeline just moved up.


The Clean Energy Revolution
Fighting Climate Change With Innovation
By Varun Sivaram and Teryn Norris

the UN Climate Change Conference in Paris came to a close in December 2015, foreign ministers from around the world raised their arms in triumph. Indeed, there was more to celebrate in Paris than at any prior climate summit. Before the conference, over 180 countries had submitted detailed plans to curb their greenhouse gas emissions. And after two weeks of intense negotiation, 195 countries agreed to submit new, stronger plans every five years.

But without major advances in clean energy technology, the Paris agreement might lead countries to offer only modest improvements in their future climate plans. That will not be enough. Even if they fulfill their existing pledges, the earth will likely warm by some 2.7 to 3.5 degrees Celsius—risking planetary catastrophe. And cutting emissions much more is a political nonstarter, especially in developing countries such as India, where policymakers must choose between powering economic growth and phasing out dirty fossil fuels. As long as this tradeoff persists, diplomats will come to climate conferences with their hands tied.

It was only on the sidelines of the summit, in fact, that Paris delivered good news on the technology front. Bill Gates unveiled the Breakthrough Energy Coalition, a group of more than two dozen wealthy sponsors that plan to pool investments in early stage clean energy technology companies. And U.S. President Barack Obama announced Mission Innovation, an agreement among 20 countries—including the world’s top three emitters, China, the United States, and India—to double public funding for clean energy

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