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Weekly production capacity at the Tesla Factory in Fremont will be at least 2,500 after the upgrade of the Body Line in Q1 2015.

After having listened to Elon Musk, JB Straubel and Deepak Ahuja on the Conference Call yesterday, I have to assume/conclude the following:

There is only one Assembly line, and this Assembly Line has now been upgraded (more efficient, more automation, resulting in a higher production capacity per week). Production will start again on August 4th, 2014. The Body Line will be upgraded in Q1 2015.

In reply to Ben Kallo with Robert W. Baird: "Regarding the production (capacity) increase to a level of 100,000 unit a year, by the end of next year. Some other step to get you to that level?"

Elon Musk: "Well, there is a big step that´s expected to occur in Q1 next year (2015). Which is the bring up of the S/X Body Line. So, what we did in the past two weeks is the Assembly Line, where it´s basically that the bits get put together. But then the Body Line is where the body itself is welded and bonded together, where in fact the core skeleton of the car is created ..... We are gonna bring the Body Line up in parrallel with the current Line. Unlike this case with the Assembly (Line), we didn´t have two complete Assembly Lines, we had to stop and retool. In the case of the new S/X Body Line, which is a line that has been designed to be capable of 2,500 units a week, maybe more than that. Conservatively 2,500 units a week. At a lower cost point. We should be able to do that in parrallel (Model S + Model X). Another really big upgrade is the Paint Shop. There are a few cases where advanced CapEx spending makes sense even though it's gonna pay of in two to three years. But it's such a big improvement that you kinda wanna do it, even at a high discount rate. Our Paint Shop is being upgraded and it's gonna be the most advanced Automotive Paint Shop in the world. It's expensive to do that."

My question now is: "Can we assume/conclude that the Tesla Fremont Factory will have a production capacity of at least 2,500 cars a week (Model S + Model X), by the end of Q1 2015?

Please post your comments/arguments both if you agree or disagree with this assumption/conclusion.

Thanks

Again, pretty much as I thought. Production and capacity are two different things.

Confused by your question Benz. Don't you answer it before you even ask it?

Why would you have to assume anything when that is exactly what they state?

To realise growth for Tesla Motors they will have to get to a higher number of annual deliveries of the Tesla Model S (and as from 2015 also the Tesla Model X, and as from 2017 the Tesla Model 3, etc.), we have to consider the combination of a number of important subjects/factors. And there needs to be a kind of a balance with these subjects/factors. Among other subjects/factors which are also important, the seven most important subjects/factors are (in random order):

- Stores;
- Service Centers;
- The Supercharger network;
- Demand (reservations and orders);
- Production capacity at the Tesla Fremont factory (+ the additional Tesla factories later on);
- Supply chain (among other items, most importantly the shipments of the Panasonic battery cells from Japan).
- Enormous amounts for annual investments in R&D and future products.

The comments of Elon Musk as mentioned in my first post in this thread concern the subject/factor "Production capacity at the Tesla Fremont factory".

Although 2,500 (up to a maximum of 3,000?) cars per week sound like a lot (certainly currently), this will soon (2017?) become a bottleneck for getting to a real high annual delivery number (200,000 S/X in 2017?).

Therefore, I think that investments concerning an even more increasing production capacity to an even higher level of up to at least 6,000 cars per week will be evident and necessary soon (in 2016 already?).

Your thoughts/guesses/predictions/opinions/arguments please.

TM needs economies of scale to make M3 profitable, so I would assume they'd try to have production capacity available ASAP. Maybe even in advance?

Tesla is going about in methodical and steady way in increasing production. It has modified the Model S to make it easy to assemble, improve quality, reduce weight and costs. Supply chain has been optimized to reduce costs and improve quality - as seen in the improvements in gross margins. As a shareholder, Tesla is certainly exceeding my expectations.

If Tesla can make 200,000 S, X, they will make a lot of money. ASP=100k? Net profit 15% of gross?

Production will be less than capacity until the Generation III vehicles are in full run.

@Red Sage | AUGUST 5, 2014

"Production will be less than capacity until the Generation III vehicles are in full run."

Why?

Ron :)

Why? In my opinion... Because Tesla Motors must prepare ahead of time to build the Model ≡ vehicles. The Model S and Model X are simply a means toward that end. Tesla is not a luxury car company. The Fremont facility will not be producing the Model S at Toyota Camry levels, or the Model X at a Ford F-150 clip. I expect the Model S will reach 50,000 units per year, and Model X 150,000. Pretty much anything over that 200,000 unit production level should be reserved for Model ≡.

@Red Sage | AUGUST 5, 2014

"I expect the Model S will reach 50,000 units per year, and Model X 150,000. Pretty much anything over that 200,000 unit production level should be reserved for Model ≡.

I hope and expect Tesla will maintain flexibility to adjust the mix of models being manufactured to roughly match the mix of customer orders. I wouldn't be surprised if the mix varies over time.

Ron :)

I concur. A little more, a little less, flexibility is the key. The focus will be on Model ≡.

Assuming 40% of production at Fremont is reserved for North America:

         2017 Production WAG
     Vehicle   World     US      
     Model S    50,000    20,000
     Model X   150,000    60,000
     Model ≡   300,000   120,000

I think this is achievable, though it will not be easy.

@ Red Sage

Wow, a ratio of 1:3 (S:X)?

The X will be three times as many as the S in 2017, both in the US as worldwide?

@Red Sage

Love your posts. However, I think you are a bit too optimistic in the Model 3 2017. Elon always delivers but he is always late. Each model has been late. So I'm expecting initial production of the M3 in late 2017. I think they won't get to 500k annual M3 production until 2020.

Also, I think Model S will easily exceed 50,000 by 2017. Figure it outsells the Merc S class by about 40% in U.S. alone and that was in 2013. I think the market for the S is well over 100,000 and I think by 2017 they can get to 100,000.

@ JZ13

Deliveries of both the Model S and the Model X in 2017 will both be 100,000+ each. These are just conservative delivery numbers for both the Model S and the Model X. Way before 2020 it will go viral. They are already thinking about a second AND a third Gigafactory. They just are not showing all their cards (yet). There are many things that we don't know about (yet).

If you take a look at sales of competing marques, those who have sedans in the same price range as the Tesla Model S, and also have a crossover/SUV at the same price points, they routinely outsell the sedan by 3:1 or 4:1.

Benz +1
Red Sage +1

I was being very conservative. Tesla created a whole new segment of the luxury car market with the Model S. Prior to 2012 a well-healed buyer who could afford to spend $100k on a car would not do so if they were an environmentalist. This segment would spend $40k on a car and feel good about not wasting resources. Now these folks have a reason to spend $100k and they are doing so en masse. Just look at Laguna Beach for proof. Model S are now everywhere and many of them driven by friends of mine who never would have spent that much money on a car prior to Tesla. So I think we can expand the demand for Model S/X over a wider population than for a typical luxury car.

Taxi, limousine, and shuttle companies are going to snap up the Model X like no tomorrow is due. Model X will sell in snow laden environments even faster than it will to posers in Los Angeles. This is why the Model ≡ crossover must be among its initial releases on that platform.

The Tesla factory in Fremont is operational again since Monday August 4th, 2014. That's more than two weeks ago.

How soon will they be producing 1,000 (or more) Tesla Model Ses per week? How soon can they reach that rate/level of weekly production? How about: as from the first week of September 2014?

Projected by the end of the year.

@ Brian

Yes, officially that has been projected by the end of the year. But to get to the 35,000 Tesla Model S deliveries in 2014, they will soon need to get pretty close to the 1,000 Tesla Model Ses per week, which would be 900+ Tesla Model Ses per week. How about: as from the first week of September 2014?

The Body Line is to be upgraded in Q1 2015. Will there then again be a one or two week pause in production, like when there was a pause in production in July 2014 when they upgraded the Assembly Line?

@Benz,

Actually, Elon did say that on the conference call and then corrected himself:

"Well, there is a big step that's expected to occur in Q1 next year which is the bring up of the body line, the SX body line. So we've -- what we did the past two weeks is the assembly line where basically the bits get put together. But then the body line is where the body itself is welded together, welded and bonded together. So it's like the core skeleton of the car is created. And so we anticipate probably -- well, I'm not sure if -- it may only that we -- actually -- sorry, I take it back.

We're going to bring the body line up in parallel with the current line. So unlike this case with the assembly, we had to -- we didn't have too complete assembly lines, where we had to stop and retool. In the case of new SX body line, which is a line that is designed to be capable of 2,500 units a week, maybe more than that, conservatively at 2,500 units a week, at a lower cost point, we should be able to do that in parallel."

http://seekingalpha.com/article/2368515-tesla-motors-tsla-ceo-elon-musk-...

Duh... Can somebody explain all that in plain English?
Thanks.

Any impact from the 6.0 earthquake this morning in Napa??

No impact from quake--Fremont is far away....

@JPPTM

It's not just distance it's also magnitude and terrain that matters. Loma Prieta was ~70 miles from the Marina District, but the fault line system was closer (not to mention liquefaction amplifying issues too). I would not be surprised if they felt the Napa quake in Fremont. I know I felt the Loma Prieta quake all the way up in Berkeley.

JeffreyR--agree. Not trying to over analyze but news reports here in local area do not mention any significant shaking or damage on the peninsula.

This is an interesting article in the light of this thread:

"The recently expanded production capacity is now fully operational. The new capacity allows for weekly production of up to 3,000 vehicles, which means the company now has the capacity to begin building the Model X crossover, due out in the spring."

Link: http://www.ibtimes.com/tesla-motors-factory-revealed-silicon-valley-meet...

"....up to 3,000 vehicles" just indicates the physical capabilities of the line. It still comes down to how many battery packs Tesla can make. I doubt they build a bunch of bodies, set them aside to fit the packs later.

It's funny that whenever it's mentioned that so and so will be able to produce "up to x,xxx widgets", nobody pays attention to the "up to", just the x,xxx.

I've noted that people have a strong tendency to either overlook or misquote qualifiers in statements from Tesla Motors.


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