By on October 27, 2017

tesla factory fremont, Image: Tesla Motors

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]

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71 Comments on “Tesla’s Production Goals Are Starting to Look Unfeasible...”

  • avatar
    SCE to AUX

    “Tesla’s Production Goals Are Starting to Look Unfeasible”

    Did any reasonable person ever think they were feasible?

    Tesla’s in a deep hole, and it is going to start losing reservation holders for the Model 3 as confidence wanes in both the product and the company.

    Make no mistake, the Model 3 is the company’s future – its stated goal for many years. The Models S and X were merely a means to that end. If they bomb the Model 3, it’s ultra-bad for Tesla. Yet, they may still be too big to fail for their investors.

    • 0 avatar

      Tesla’s boys and girls better be working on a crossover Model 3 or they won’t have to worry much about meeting production volumes.

    • 0 avatar

      I was very annoyed and saw the 500,000 vehicle goal as unnecessary bragging. He burned out his people and put his product at risk. For what?

      Now he needs to eat his humble pie, with crow on the side. Then, get back to work with realistic deadlines and build a product his workers can be proud of.

    • 0 avatar

      Even if 50% of reservations cancel, they still have more on their hands than they can meet in a reasonable timeframe. Once the production does ramp up the reservations will be replaced quickly enough.

      Their challenge is to keep X and S sales strong to keep enough money in the bank.

      • 0 avatar

        JP –

        The bigger concern for them is going to be the competition: It’s reasonable to expect that it will be 18 months before they can really ramp to meet demand.

        The next 18 months is make or break time as a lot of the big players will be bringing their products to market – in volume.

        The first round of Model 3 buyers are still early adopters, and likely wealthier earlier adopters who either don’t need a car, or who can afford to have multiple cars in the garage and can afford the inconvenience of delays. The question for Tesla is what demand looks like once the early adopters have come and gone and what things look like once the big boys start chewing away at the high end (BMW, Audi, Porsche) and really go after the mass market (post-diesel-reinvigorated Volkswagen).

        The big fudge factor will be gasoline prices, which barring a major worldwide conflict, are likely to remain depressed for quite some time to come; Combined with some major improvements to the traditional ICE that are just now coming to market and continued improvements in weight savings.

        I’m all for Tesla’s disruptive behavior to the market, but I also know that the traditional automakers are extremely saavy and have become a lot more nimble than the dinosaurs of the 1970s and even the early ‘naughts. If an organization as sclerotic, bureaucratic and traditional as Volkswagen can pivot as quickly as it has in the last 24 months, it shows that the old boys club may not be like the dinosaur industrial leaders of the past.

        • 0 avatar

          My outlook is neutral on Tesla’s competition. They have baggage. Electrification is not as simple as an engine swap. I know, the Chevy Bolt is mostly an engine swap with tweaks, but I’m not clear how it’s doing. I’ve read reports that in recent months, it sold better than the Tesla Model S, but isn’t that comparing apples and oranges? I’ve also read there’s a surplus of Bolt inventory on dealer lots, so it’s a mixed bag at best.

          To its advantage, Tesla has software, the supercharger network, the power wall, and can also bypass the dealer network in some states. Yes, it’s wise not to underestimate the competition. I don’t think Tesla is taking their lead for granted.

        • 0 avatar
          Big Al from Oz

          I do believe the auto majors will trounce Tesla. Telsa and other Elon Musk socialist enterprises will need to be broken down and sold off.

          Even the battery business will eclipse Tesla.

          To give credit where credit is due Elon is a visionary. But being a visionary doesn’t mean you have the acumen to run a major industrial complex.

        • 0 avatar

          Model S is the car for wealthy early adopters. I am almost, but not quite, in this financial class. My current car is a Mercedes CLS, which is in roughly the same class as the Model S, but I buy certified pre-owned, not new. I replaced my 2011 CLS with a 2014 CLS(*) about a week ago, and I seriously considered a pre-owned 2012-2014 Model S. They are still quite expensive and I have a situation where it’s difficult for me to be consistently near a charging station, so I passed. I would not have considered a Model 3 because I like a large, roomy and upmarket car, and I think most genuinely wealthy types would be in roughly the same position. From what I understand the difference in electricity consumption is in no way significant between the new cars because they are both so efficient.

          On my way to test drive the Model S, I saw BMW’s new electric car on the road(**). I must say it looks absolutely hideous, a bit like a warped Honda Element. The 2018 Nissan Leaf looks roughly like the Nissan Versa, which is great if you want a car with utility, lousy if you are an early adopter who wants a distinctive, stylish vehicle. The Bolt looks like an incredibly dull General Motors car, which I understand it is. Most of the other electric cars I’m aware of are similar. The Model 3 looks like a mini-me Model S.

          So I can see people cancelling orders for Model 3 because they need a car sooner. I doubt that they will cancel orders because they would rather have the BMW i-series, Nissan Leaf or Chevy Bolt. The Model S appears to be much nicer than any of them.

          Of course that sports car style BMW i-series looks intriguing but it’s not a very practical design. Model S works for people like me who need a four-door sedan.


          (*) Mini review: New to me CLS has a crushingly superior interior and electronics system to the old model. Bluetooth works. I like the color center screen and all the safety gadgets. It really feels like a S-class. Drives more like one, too. I don’t think it has quite the performance car verve of the old model. It’s just as fast but not as involving for the driver. But perhaps because I’m getting older, I actually like it better; it leaves me more relaxed during long drives. One downside is that fuel economy, as reported by the trip computer, anyway, is about 10% worse than the old model. I suspect this is because of greater weight. It’s super-smooth and extremely luxurious. And the performance still makes me smile. Overall I’m very happy.

          (**) I live in South Florida. South Floridians will buy literally any car, however lousy, as long at is unique and makes some kind of statement.

    • 0 avatar
      healthy skeptic


      I also used to think the legacy manufacturers would eventually trounce Tesla at their own game. That may still happen, but so far they seem to be taking their sweet time about it. There is such a thing as being too cautious. If the legacy manufacturers wait until electric cars have clearly broken through, they may find themselves with a lot of laps to run to catch up. It’s not just production, it’s also branding and consumer awareness.

      • 0 avatar

        ” It’s not just production, it’s also branding and consumer awareness.”

        Agree, which brings us back to why Musk is in Puerto Rico. He’s doing his job, building brand awareness and good will. With solar panels, he restored power to a children’s hospital, gratis.

        • 0 avatar

          @WheelMcCoy –

          Again, don’t disagree, but I don’t put nearly as much value on that in the market of ideas and products – and neither do the masses. I’ll use Apple again as an example: few buy Apple products because of their environmental stance or human rights efforts. These are good things, but they don’t move product in volume.

          Apple’s resurgence began with the iPod in 2001 because the product was better at solving a specific problem than any of the other half-arsed solutions available at the time. Same for the iPhone. Both products came about at the right time, with the right level of underlying technology maturity and solved specific problems that the competition had not yet worked out.

          It’s all about the product. If you build a good product and run a good organization, your product will sell. Musk has a good product, I simply question the timing and sustainability of the operation – especially in light of competitors who have not been keeping their heads in the sand and also have mastery over the production, distribution and after-sales systems.

      • 0 avatar


        Agree wholeheartedly. This is why the next 18 months will be so critical for Tesla – it’s when the big guns will actually have product on the market.

        Musk and Tesla look at the market they’re battling in and seem to think they’re the iPhone to the Blackberry and Motorola Razr of 2007. There’s a big difference, however: when the iPhone disrupted the market it is because it merged a lot of technologies into one integrated package that actually delivered on its promise. Cellphones were just that: phones – they did everything else horribly.

        The car industry is completely different: the existing product isn’t crap, unlike the cellphones we had pre-iPhone. He’s done a great job of the vision and pushing the industry toward a post-petroleum world, but he very well could end up at the wrong point in time.

        Ironically, branding and consumer awareness is double-edged for Musk: while the brand IS “electric powertrains”, I really don’t think the mass market gives two licks about it and here’s why: manufacturers have demonstrated (much to the frustration of many of us on this and similar forums) that consumers don’t really care about powertrains anymore. So long as the car is reliable, comfortable, offers good fuel economy and all of the bells and whistles, whether it’s running a 320hp 6-cyl or a 275hp 4-cyl isn’t the key factor.

        The car enthusiasts were up in arms when BMW and Audi downsized the 3-series and A4 from the standard 6 to a standard 4 – but the masses gobbled them up anyhow.

        I think the same will occur with electrified powertrains: it will be yet another option on the diesel, petrol, 4, 6, 8, etc. menu of options for the foreseeable future.

        So yes, consumers will think Tesla when they think electric cars, and early adopters as well as those who buy for environmental reasons will likely jump to them 100% of the time; But when we talk mass market, the move to majority electric cars is going to be much slower than Tesla would lead you to believe and in that scenario, the legacy automakers have a monumental leg up.

        The iPhone caught the other makers completely off guard because Apple took all of the pieces available and created a consumer grade product that for the first time (in that industry) “just worked”, and worked in a completely integrated, holistic manner – and the technology had matured to the point where it could be brought to market *affordably*.

        Tesla isn’t in the same situation with respect to automobiles: Many automakers have the technology and expertise to deliver the quality, performance, scale and after-sales support that consumers demand. The problem is that the technology is still too expensive, has not yet matured to be mass-marketable, and frankly – consumer demand simply isn’t there yet in large enough numbers. These trends are all shifting in favor of electric cars, and Tesla’s bet is that the industry will move there much faster than I think it will. Musk’s first mover advantage would be effective under a major gas price spike – but under the market as it seems to be progressing, electrification will just become another checkbox on the order form.

        • 0 avatar

          All fair points. I want to clarify that there were good pre-iPhone cell phones: Treo, Blackberry, and Motorola Star Tak.

          Apple had trouble convincing telecommunications carriers to take on the iPhone, and annoyed at their gate keeper status, he called them “orifaces.” He got AT&T to sign up, giving them a very profitable 2 year exclusive contract, which was extended for maybe another 2 years.

          Yes, traditional car makers have experience, in spades. But I wonder if they know the difference between experience, and hubris, and baggage.

          Tesla’s mission is single minded and clear. In contrast, traditional auto makers will argue to balance their product line. And will need to retool. And the bean counters will push for the parts bin.

        • 0 avatar

          Sorry, I can’t resist one more comparison:

          Tesla is to big auto makers as iPod is to Zune. :)

          Microsoft was bigger, richer, and very experienced compared to the underdog of the day, Apple.

          • 0 avatar

            Don’t forget, Wheel, that had Bill not infused cash to post-Lisa Apple, it may have gone the way of Lenovo.

  • avatar
    01 Deville

    And two months delay in the production capacity will eternally doom the product and its perception in the market. Not.

    • 0 avatar
      Big Al from Oz

      01 Deville,
      WTF? Unlike Apple, Tesla has not produced any real tangible product of value to a shareholder. Most of the value in Tesla is “what might occur”. This is coming to fruition.

      Tesla has a problem. It doesn’t have the knowledge to build huge volumes of vehicles. Even with the low volume vehicles it has produced, what were the profit on them?

      Some will state its not about profit, it’s about gaining expertise and knowledge, well the major manufacturers have this in droves, Tesla doesn’t.

      Tesla built low volume, expensive vehicles. Maybe Tesla should of improved on this and not enter a market that will be dominated by the major vehicle producers.

      Tesla is umcompetitive in vehicle manufacture, many people will lose lots of cash.

      This doesn’t even take into account his battery business which will eventually fail against competition.

      Just being “first” doesn’t offer success. You need expertise, which Tesla doesn’t have and can’t readily buy off the shelf. This expertise needs to be from the top down to the lowest dude on the floor.

    • 0 avatar

      It’s more than a two month delay. Panasonic’s total battery capacity for Tesla is 250,000. It would take much longer to build capacity, and then materials would be the bottleneck, primarily cobalt. Other materials would see major price increases, since production is nearly met by current demand.

      The big problem is China isn’t allowing export of rare earths or cobalt, reserving them for Chinese EVs. Musk had to know that when he set the model 3 production. Apparently he just couldn’t stop the hype or the company stock would crash.

      • 0 avatar
        Big Al from Oz

        Cobalt is also a secondary ore from the mining of nickel, lead, silver, etc.

        So, for Cobalt to be viable either the price drops on nickel or there is a massive increase in the mining of these primary ores.

  • avatar

    Why don’t Testla hire some engineers from the other Automaker… You know someone who knows how to build cars in volume…Or buy one of those shuttered factory in the Midwest to build or supplement the model 3

    • 0 avatar

      Yeah, maybe they could get some ford engineers to help teach them how to attach steering wheels. Alfa Romeo Guilia engineers might be a big help too. Maybe Nissan and Subaru could teach them how to do final inspections.

      • 0 avatar
        Big Al From 'Murica

        Ggmake it FCA because from what I’ve seen assembly quality is almost at the level of an 80’s Dodge Daytona and the FCA folks could probably get them over the top.

    • 0 avatar
      SCE to AUX

      @montecarl: Tesla *does* employ lots of automotive engineers who came from other companies. They haven’t developed 4+ cars with poached app writers from Apple.

      • 0 avatar

        To be fair, with Project Titan being more or less canned, there are a bunch of mainstream automaker engineers that Apple headhunted tooling around California these days. A fair few of them probably made it to Tesla.

        For a while there Apple was throwing obscene salaries out and trying to buy whole departments.

        • 0 avatar

          Project Titan being all over the news is a pump and dump operation. As the stock hit record high the stake holders (i.e. Carl Icahn) sold them all and profits.

    • 0 avatar

      They could’ve learned a bunch from Toyota during their brief joint venture, but The Elon knows more, so f–k that.

  • avatar

    If he has twice as many employees as when it was NUMMI, I hope most of those are in Engineering, or he’s running an extremely inefficient operation, if he needs that many workers for current production levels.

  • avatar

    From what I read, Tesla is having issues with the use of steel. The other models utilize a lot more aluminum. According to a couple of reports, the welds are too hot on the line that is causing adhesion difficulties. The 260 that are done were most likely finished by hand.

    This is why Auto Manufacturers spend so much time building out test cars on the line before they even introduce the car. A lot can go wrong. Heck, The entire PT Cruiser program was almost cancelled because they had difficulty fitting the engine into the bay during initial test runs.

    Elon may be a revolutionary. I hope he succeeds. However, Elon, like Ford, doesn’t always have a better idea.

  • avatar

    FCA to the rescue?

  • avatar

    “Tesla’s Production Goals Are Starting to Look Unfeasible”

    “Did any reasonable person ever think they were feasible?”

    Exactly. Although this latest failed “prediction” should send the stock skyrocketing.

  • avatar
    Big Al from Oz

    Tesla is a doomed manufacturer and will be sold to the Chinese once a deal is struck to start Chinese production.

    The Chinese will make it work. The Chinese are not the world’s dominant manufacturer because of cheap wages anymore. They are moving towards robotics quicker than most countries.

    Ironically the US moved to mass production quicker than Europe and the Europeans stated how poor US quality was.

    • 0 avatar

      More predictions from our resident genius, just like how Ford trucks would flop with aluminum bodies and turbo 6 cylinders. How’s that workin for ya? Ford sold /only/ 86,000 trucks last month.

      After reading your post, I have more confidence than ever before in Tesla’s success.

      • 0 avatar
        Big Al from Oz

        Oh Johnnie do little,
        What nonsense, why are you such a troll?

        Ford is number 2 in pickup production, like I stated.

        I do believe aluminium is the WRONG answer in producing a competitive pickup. Aluminium is only “competitive” because of the lack of real competition.

        • 0 avatar
          healthy skeptic

          Didn’t Ford trucks drop about 700 lbs by going to Aluminum? That weight loss seems pretty competitive to me.

          • 0 avatar
            Big Al from Oz

            The vehicles weight isn’t what makes it competitive. It’s the profit vs loss.

            The only reason Ford is able to produce an aluminium pickup is to do with how the light commercial vehicle sector in the US is closed to imports.

    • 0 avatar

      The lack of industrial robotics and machine tooling is another problem US manufacturing has to address. There are virtually no US machine tools or Robotics in US factories. The last I looked the US has slipped to 7th place in machine tool production. Even the Italian and Swiss are ahead. For this reason I believe the US will not be the major player in the next industrial revolution.

  • avatar

    Starting to look unfeasible.

    How about “everybody not insane knew they were a lie to falsely bump stock prices up” instead?

  • avatar

    Getting the new series into production is a huge undertaking. Yet, this week alone, I have read comments from Mr. Musk on space travel, long distance trucking, and bailing out Puerto Rico. Hard to be focused when you are allowing your thoughts to bounce all over the world and, indeed, out to space. Who’s running the ship while Mr. Musk is out dreaming?

  • avatar

    Tesla history:
    Musk makes crazy products/sales predictions = stock goes up
    Musk tells about delays in product launch, missed sales forecast = stock goes up
    Rumors spread about labor unrest at Tesla factory = stock goes up.
    Musk announces another quarterly loss = stock goes up.
    Musk announces no expected profits until 2025 = stock goes up.
    Musk announces employee layoffs = stock goes up.

    Tesla stock is just like global warming: Massive heat wave = global warming, record cold winter = global warming, major droughts = global warming, huge floods = global warming. Hot, cold, wet or dry – global warming and Tesla stock only goes up. Meanwhile GM, Ford, BMW, etc. who actually sell significant amounts of cars that actually earn profits and generally meet sales/earnings projections, have lower valuations and flat stock prices.

    • 0 avatar

      Ever increasing polar cap melting=global warming. Ever increasing CO2 levels spiking at a rate far outside of geological time norms and in direct correlation with recorded temps around the planet=global warming. Receding glaciers around the planet=global warming.
      Just saying.

      • 0 avatar

        Greg, some people aren’t gonna listen.

      • 0 avatar

        Ice caps are not melting away:

        Global warming expedition gets stuck in ice:

        Letter from several dozen scientists expressing skepticism about link between CO2 and temperatures:

        Report disputing the link between CO2 and temperature:

        But hey, if you want to immediately shut down the global economy and put the world into energy poverty because there is a tiny chance that some glaciers will melt in 200 years, I’m sure you will find lots of support.

    • 0 avatar

      In the last 10 days or so, Tesla stock *dropped* from $359 to $320.

    • 0 avatar

      Every year is hotter than the last. Deniers cherry pick data to defend their increasingly defenseless position, such as a colder localized winter. Climate change doesn’t mean that every place on Earth warms at a uniform rate. Some places will actually get colder because of changing circulation patterns. But the overall trend isn’t going to change from it’s upwards trajectory.

  • avatar

    Tesla should focus on making reliable cars before they make anymore. In the Uk they finished rock bottom in a recent survey, slightly worse than Jeep. So I’ll stick to the more reliable Land Rover brand….

  • avatar

    Honestly, has “visionary” Elon Musk ever made an accurate estimate or prediction of anything? The original advertised base price of the Model S ($49,000, but really was $60,000+), the driving range of the original Model S, the production schedule of the Model S, the price of the Model 3 ($35,000, average over $45,000
    and can exceed $53,000) , the capabilities and time frame of the $8,000 “autonomous driving” option (nowhere to be found – class action lawsuit), the claim that his Fremont employees were comitted and happpy folk – NLRB complaints,protests by fired workers over non-existent “performance reviews.” Violation of California labor laws WRT layoffs versus firings, his gigafactory
    claims that find a factory no where near production capacity.

  • avatar
    el scotto

    Can/could someone notify the SEC about this mess?

    • 0 avatar

      I don’t think there’s any mystery about Tesla and their stock. It’s reported and commented on every day across the media, proponents and contrarians both. It really comes down to does one believe in Musk’s vision and promises or not.

      If the stock craters, nobody should act surprised, but remember tulip bulb mania went on for years before crashing.

  • avatar

    All of this reminds me of the movie Gung Ho.

    Just change out 15,000 cars in a month to 50,000 cars and there you go.

    https://www. you tube. com/watch?v=VSo45ZD29oo

  • avatar

    Tesla 3 production is like Quantum computers. It isn’t quite here yet. Think of multiple Qubits on the same line.

  • avatar
    healthy skeptic

    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.

  • avatar

    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.

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