Tesla is to build a factory in China capable of producing 500,000 annually, in two or three years' time , according to reports Tuesday.
To us, the statement provokes a certain deja vu, an echo of things we have heard before. Tesla has talked about a China factory for years, but that number keeps recurring as well.
Maybe it has such resonance, because when Tesla first started to attract press for its Roadster, it was the hybrid production of a rival automaker which provided an obvious contextual datapoint: “with more than 500,000 cars sold globally, Toyota's Prius is clearly one of the cars of choice for green consumers”, wrote the Australian in 2006.
In 2007, JP Morgan pegged annual hybrid sales for the industry at the 500,000 mark. When customers started to take deliveries of Tesla's sports car the next year, half a million was also the number of Prius battery packs Toyota's factory could churn out annually.
When Musk's venture also came close to bankruptcy in 2008, “Tesla had less than $500,000 in the bank”, according to a later Wired profile . Planing to build a factory in San Jose in 2009, it was a 500,000-square-foot facility the company repeatedly said it wanted.
As luck would have it, the old GM-Toyota plant Telsa bought instead had substantial room. Business Insider reported on the company's IPO roadshow in 2010, including comments from CFO Deepak Ahuja:
Deepak also says the Tesla factory has a capacity to make 500,000 cars annually. It will be 80 per cent dark at first, but Tesla hopes to get the whole thing working in a few years.
A 2011 press release recorded that Tesla Roadsters had together driven 10m miles, leading the company to estimate they had “collectively saved 500,000 gallons of fuel”.
In 2012 Musk promised SpaceX, one of his other companies, would eventually take passengers to Mars. The mooted price of a round-trip ticket? $500,000.
The following year Musk took to the stage of the company’s Hawthorne, California, design studio, with what the NYT called “his customary flair”, to announce announce a new option for the Model S: swappable batteries. The idea was eventually dropped, but at the time the company estimated the cost of swap stations as $500,000 each.
In 2014, the benefit to society of the introduction of superchargers had also been calculated:
#WattsUp : Tesla Superchargers have offset more than 500,000 gallons of gas. pic.twitter.com/d6u9xST1UN
— Tesla (@Tesla) April 3, 2014
At a time when Tesla was making around 7,000 cars per quarter, Musk was putting out a grand target for the future, half a million cars a year by 2020:
To be fair to the entrepreneur, he isn't the only chief executive to have found the number beguiling. It seems to be a magical market of non-fossil fuel scale. In 2008, Honda said it wanted to get to 500,000 hybrid sales some time soon after 2010.
The Japanese group sold about 200,000 that year, which is when rival Nissan launched the electric Leaf. Chief executive Carlos Ghosn said he expected the company to sell 500,00 electric cars by 2013, when Leaf production forecast to be profitable.
As he told the WSJ :
“You see a lot of skepticism in the industry. If a competitor doesn't have an electric car, they are skeptical. When the public jumps in, they are going to say, 'Why didn't we see this earlier?' ” Mr. Ghosn said. “My biggest worry is that this market is going to grow too fast” and require additional investments in plants.
The latest target for Nissan is an even more ambitious 1m vehicles by 2022, but last year the group put out a mere 173,000 electrics. Honda got to more than 280,000 hybrids a few years ago, and the big target has been pushed out to 2020.
At the end of last year BMW got into the act. The German carmaker aims to get its total for production of electric and hybrids to the apparently magic 500,000 by the end of 2019.
For Tesla and Musk, various places the figure turns up could of course be a coincidence. There's a broad range of amounts which can usefully be rounded to half a million, and maybe that just happens to be the basic increment the visionary thinks in, a sort of billionaire binary. Start looking for any number obsessively, and patterns can appear without meaning.
Still the range of contexts and estimates which result in the same figure seems worthy of note.
We're still looking for the original source, but in the discussion of battery life online a mooted figure comes up a lot . Here's an extract from a 2016 Electrek post , for instance:
CEO Elon Musk once referred to a battery pack Tesla was testing in the lab. He said that the company had simulated over 500,000 miles on it and that it was still operating at over 80 per cent of its original capacity. It sounds crazy. The car itself is more likely to give up than the battery pack at this kind of mileage, but based on this new data, it looks a lot more plausible.
Tesla's own website also carries the figure in a consumer testimonial from the same year:
Tesla claims to have put batteries through 500,000 miles empty-to-full charges and the batteries still retained more than 80% of their capacity.
While the company was bullish - the 500,000 production target had been pulled forward to 2018 - it had spent 2016 facing controversy over the first fatal crash of a Tesla in autopilot mode. As part of that, Musk sent an email to Fortune with another estimate:
Indeed, if anyone bothered to do the math (obviously, you did not) they would realise that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available.
That year Tesla had also started to take reservations for its Model 3, a new car promised at a mass-market price of $35,000. After an initial huge surge of deposits, the company stopped disclosing the figure for customers putting money down. Then, ahead of a launch event in July 2017, Musk gave reporters an update : reservations were over 500,000.
The figure reflects the huge hype about the company, which could recently brag on Twitter about how many people want to work there:
Thank you to our nearly 500,000 applicants in 2017 and to our 37,000 employees worldwide. https://t.co/t1e5CTWZ07 https://t.co/uqeeWtAoEQ
— Tesla (@Tesla) March 21, 2018
However, enthusiasm for reservations appears to have tailed off. In a May tweet , defending his behaviour on an analyst conference call, Musk said the “reason RBC question about Model 3 demand is absurd is that Tesla has roughly half a million reservations, despite no advertising & no cars in showrooms”.
Unlike estimates which might involve some boosterish rounding or generous assumptions to get to a memorable 500,000, investors can at least assume an executive disclosing company numbers has to be accurate.
The reccurance of the figure in disparate contexts does suggest that when it appears as an approximation or a target, it might attract a little more critical enquiry. Take for instance a Tuesday tweet with claims for the business titan's economic impact:
No, it means I created jobs for 50,000 people directly and, through parts suppliers & supporting professions, ~250,000 people indirectly, thus supporting half a million families. What have you done">— Elon Musk (@elonmusk) July 10, 2018
Some wondered why so many workers had two families, and it prompted Musk to correct himself:
Thanks for correcting me. I meant to say over half a million people.
— Elon Musk (@elonmusk) July 11, 2018
Asked for comment, a Tesla Spokesperson said:
Congratulations to the Financial Times on your 500,000th negative article about Tesla. Very impressive work!