Tesla's Production Goals Are Starting to Look Unfeasible
We’ve debated Tesla Motors’ production ramp-up in the past, coming to the obvious conclusion that the automaker has a long road ahead of it before its proposed volume goals can be reached. The company knows this and Elon Musk has repeatedly said scaling up Tesla’s vehicle assembly will be akin to a kind of “production hell.”
However, we haven’t done a comparative analysis to extrapolate just how ambitious Tesla’s targets truly are. Half a million vehicles by next year is a lot of annual production for any fledgling automaker. We assumed the company would do its best and we’d see how close it came to the bar at a later date. But, with the Model 3 production getting off to an incredibly slow start, it’s worth looking at how far Tesla’s factory in Fremont, California, will have to climb to achieve the desired numbers.
It isn’t looking particularly good in the short term.
According to an analysis of U.S. automotive factories from IHS Markit, Fremont was ranked 65th in terms of production volume in 2016. In order to hit its 2018 target of 500,000 units, it would need to become 2nd in the country. As impossible as that sounds, Tesla does have a few things going for it.
First of all, the Fremont facility is capable of some big numbers. While it has never hit half a million units, it did manage 428,636 vehicles in 2006 — back when it was still building the Toyota Corolla and Pontiac Vibe. There’s also nearly twice as many employees there now than when the plant existed as a joint venture between Toyota and General Motors.
However, Tesla wants to built a million cars per year by 2020, and that will require at least one more facility — which could be located in China. There is also a disparity between what the company told its investors about product volume and what it wrote on tax exemption documents at the start of this year. Considering Teals only built 260 Model 3 sedans in the third quarter, after setting a goal of 1,500, we’re beginning to wonder how seriously it is taking this production increase. Elon Musk has, of course, concluded there is nothing to be worried about.
“Musk is a Category Five breath of fresh air in an industry that really wants to be stodgy and boring,” James Womack, the founder of the corporate think tank Lean Enterprise Institute in Cambridge, Massachusetts, told Bloomberg in an interview. “But it’s a tough trick to launch a new product, a new manufacturing system and a new company, and to make it all work in a crazy, crack-brain schedule that Musk may never have believed in to begin with.”
For the company’s sake, hopefully Tesla can figure out how to get the ball rolling on this production ramp-up, but we aren’t holding our breath. The automaker will do what it can and we’ll see how its promises measure up to reality next year.
[Image: Tesla Motors]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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I'm a Model 3 res holder, and I've always though the production goals sounded extremely unrealistic. Speaking only for myself, I'd rather the car be delayed and ultimately done right, instead of receiving some rush job. So I'm not that upset. Many res holders have waited years for the chance to own a Tesla. What's another 6 months, if it ensures the car is awesome? I'll probably end up deferring my slot as far out as possible, to get a car with a higher trim level and most of the kinks worked out. The units released so far seem kind of like glorified test cars.
What Musk says is half brilliant half bs. This is a guy that said that his company would be sending humans to Mars by 2025. Yet Space X has not even sent an astronaut into Earth's orbit. There is nothing really wrong with his exuberance, but it has to be taken with a grain of salt. As for Tesla I never thought it was as legitimate as Space X.