Tesla: Production Capacity Of Model 3 To Average 226,563 Units Per Year Over Next Five Years

George Orwell famously wrote that “to see what is front of ones nose takes a constant struggle,” and it turns out that the answer to one of the biggest mysteries in the auto industry has been hanging out directly in front of the public’s nose for some time. In a January 2017 application [PDF] for sales tax exemption (STE) from the CAEATFA program, the California Treasurer revealed that

“Tesla represents the Project will launch the Model 3 and provide the capacity to produce and deliver an average of 226,563 units per year over a five year period, in addition to its Model S and Model X production.”

This revelation provides an unprecedented clarity about Tesla’s production ambitions for its “more-affordable” Model 3 sedan, and contradicts representations that Tesla executives have made in quarterly conference calls with analysts and the media.

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Tesla Plans Long-Term Expansion Of Model S & Model X Capacity

teslaplant

Throughout its history, Tesla has always been a company that is looking ahead. Even when the company was hand-assembling tiny volumes of Roadsters, CEO Elon Musk’s “Top Secret Master Plan pointed the way towards lower prices and higher volume. Now, with two vehicles on the market and annual production volumes moving towards the six-figure mark, Musk told analysts on Tesla’s most recent earnings call that lower-cost, higher-volume Model 3 is “overwhelmingly our focus.” As for the Model S and Model X, Tesla’s so-called “Gen 2 vehicles,” Musk says “things feel really quite stable.”

That doesn’t mean that Tesla is done investing in its current lineup, however. In fact, the electric automaker’s latest approved application for sales and use tax exclusion (STE) from the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) [PDF of CAEATFA’s staff report here] reveals that it is actually spending nearly half a billion dollars in order to expand the production capacity of its Gen 2 vehicles to 195,000 units per year by approximately 2021.

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Why Are These Teslas Gathering Dust?

Tesla's Ghost City?

Tesla’s Ghost City?

Tesla has taken a beating in recent months for the quality problems that are affecting the Model X (and to a lesser extent, Model S) as the California electric automaker struggles to scale up. And with Tesla’s production and manufacturing VPs leaving the company and a massive production ramp looming which aims to take the company from 50,000 annual units of production to 500,000 units in a few short years. As Bertel explains over at Forbes, Tesla’s ambitious plans deepen the gulf between it and the real world of automotive manufacturing. But even if Musk can turn a century of automotive expertise on its ear, another challenge awaits that I lay out in my most recent Bloomberg View post: [Continue Reading]

Tesla’s NOx Problem: Model X Delay Explained?

Model S - Picture courtesy Tesla

As the maker of tailpipe-free electric vehicles, Tesla is perhaps the last auto manufacturer you’d expect to struggle with an NOx emissions problem. Yet like any other auto manufacturer, Tesla operates factories which produce a variety of emissions including the NOx carcinogens at the center of the recent Volkswagen scandal. In fact, Dailykanban has discovered that Tesla has self-reported an NOx noncompliance at its Fremont, CA factory that may be contributing to delays in the production of the firm’s new Model X SUV.

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