Featured Tesla needs to Catch up

Why did it ever make sense to build a car in a state where wages and taxes are high?

 

Guess you missed the joke?

Noticed I wrote "autopolit" and not "autopilot"?

You know... like "Star F#@cks" instead of "Starbucks".

 

I think this is the REAL achilles heel of their master plan.

 

40% (roughly) of that capacity is exported.
If they build that 40% elsewhere, they have more capacity at home.

 

Musk has claimed the capacity of the Fremont assembly plant is 500,000, no one really knows what the capacity will be when they get their manufacturing process down. The Chinese factory is supposed to be for 500,000 vehicles, but physical size and real capacity and costs are unknown. The last week in june the factory produced 7000 vehicles running 3 shifts, for a run rate of 336K for 3 shifts in 48 weeks. To get to 500K in 2 shifts they need to increase production speed by 2.2x which is probably doable with rearanged process, lines, and equipment. I'd say 400K with 3 shifts part of the year is definitely likely a year from now.

If they get the model Y going in 2020, the Fremont factory is the only one that will be built and able to produce it. If demand of the 3 and Y and S and X in the North America is greater in the long run than the Fremont plant can produce then I assume they will expand the gigafactory in nevada, and build a new assembly plant in the US. Let's say the Chinese plant is running in 2021, and capacity is really 400k per plant, that still is a major achievement of S,3,X,Y with 800,000 production a year, up from 100,000 in 2017. I doubt growth will be faster than that, nor that north american demand will exceed 400K units in 2021 if tesla follows the trend of only selling optioned uped Y models at the beginning of production.

 

The founders lived in california and started making small runs of cars built on shells made by lotus to tesla's specification. It made sense that they were built in california, where the bulk of the customers were, and there was a close by port to import the batteries.

The question you really are asking is why did they stay in california when the model S was ready to be produced. The answer is they were low on cash, and toyota had cash and a pr problem with a factory they were shutting down. The factory was just across a bridge from where tesla headquarters already was built. It was the low risk approach, that helped tesla survive to this point, but it did saddle them with that factory today when volume went up. For the model S and X, labor costs don't really matter, these are fairly low volume high dollar cars. For the model 3 and Y, these are bigger issues. A chinese battery and assembly plant, a european assembly plant, and a second lower cost US assembly plant may be the best plan for tesla. They also probably should hire away some of the toyota, bmw, and mercedes manufacturing engineers to help get these factories built the right way. That means a big cash burn next year as they start building the chinese plants.

 

i'm sure there will be chinese investment involved, and ownership?

 

iduno .... maybe;
because it's closest to it's largest sales /market area?
because of tons of high tech dev's in the area that wouldn't move to indiana or North Dakota?
because if you run a factory on solar, it's best to be in a sunnier area?
because if there's an auto building plant already built & abandoned - you can pick up for 3¢ - 4¢ on the dollar?
because local legislators encourage green more than many other areas?
Yea .... doesn't make sense to me - from any of those lame reasons

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There will likely be a chinese or other asian partner involved with the batteries. It will be the first foreign owned car assembly plant in China.

 

And just how many other manufactures are enjoying all those benefits? Answer: none, they all left. AG gets it; move ASAP.

It's a real bubble out there:

How Silicon Valley Fuels an Informal Caste System | WIRED

San Francisco Families Earning $117,000 Are "Low Income" | Fortune

Los Angeles Has Just Criminalized Poverty - It's Now Illegal to Sleep in Cars and RVs

 

The article has been corrected.
"Now, anyone can access the Tesla Model 3 “online configurator” and lay down a $2,500 cash payment that becomes nonrefundable as soon as Tesla assigns the buyer a car. The delivery date is determined after the money’s been transferred to Tesla."

Tesla has simply dropped the reservation system, and moved the Model buying process to what they use for their other models.

The difference between Tesla and the companies pushing hydrogen cars is that Tesla was willing to spend their own money to build the infrastructure. they knew such infrastructure was required for their success.

The hydrogen car companies are saying "they are car companies, not energy companies," and they want the government and tax payers to pay for the infrastructure. Hydrogen isn't gasoline or diesel, the investment for refueling infrastructure is too high for a third party private company to make the investment on their own.

They got the factory cheap, and it may have been part of a deal for funding from Toyota.
At a future date, Tesla could move Model 3 production out of there for models with higher margins.

 

I see the CA plant for developing/prototyping. But volume should/will move to a low wage/tax state so the accountants for the short sellers will have less to gripe about. Not to mention you don't want to be so geographically concentrated that a single natural disaster wipes you out totally.

Somehow I see the China move as driven by Elon's thinking he can do anything that goes against current admin policy. Or maybe he has a long game with the next gen being the IP he doesn't give away while getting sales from the current IP he has to give.

 

This plant was the NUMMI plant joint venture between GM and Toyota. When GM went bankrupt, plant closed. Elon Musk was hunting for a factory. He was closed to signing in SoCal with so many empty warehouses for cheap. That was when Fremont mayor stepped in and gave Musk a great deal.... which was even better since it was a car plant.... plus he already got 4000 trained workers ready to come back to work without having too much retraining.

 

China is the next big car market, and they are pushing plug in cars. All the car makers are initiating large plans for there, and they started planning before the current admin.

Building a factory there lets Tesla bypass current tariffs and reduce shipping costs; India will also become an important market. Much of their patents related to cars are already open to the public; so not much for China to actually steal.

 

I think you are missing a much bigger reason - toyota. Toyota could have kept NUMMI running after GM pulled out, and moved prius production to Mississippi as originally planned, but NUMMI was Toyota's highest cost plant. They moved the truck production to the Texas truck plant, and corrolla production to the new Mississippi, two of toyota's newest and most efficient plants, that unlike NUMMI were non union without union work rules, and NUMMI's high health care costs. Toyota was happy to remove the liabilities of the NUMMI plant and the PR problem. People act as if Tesla got a good deal on the factory, I don't believe they did, but toyota did good getting rid of it. What tesla got was the other part of the deal.

Tesla needed Cash and a factory burns cash. Toyota got 2.5% of tesla for $8M ($50M investment less $42M for NUMMI) + NUMMI, and instantly increased the value of Tesla by the deal, and then later helped tesla more with the agreement to have tesla help with the RAV4 EV. Those things greatly increased the value of tesla's IPO, which kept tesla in business. That $8M plus NUMMI for that piece of tesla (1.43% after ipo and other dillution) and the rav4 ev partnership was great for toyota. They sold out in 2016 with a huge profit, there best ROI during that time period. It was a win win for both companies. Tesla's market cap today is $54B or about $775 M for toyota's portion if they had held onto it.

Toyota gets Tesla stake, Tesla gets Toyota factory | Reuters

Tesla can now easily raise cash for factories by issuing new stock (dilution) or bonds, but trying to do more than one at a time is a big risk. It is probably best to concentrate on Chinese plants that do both battery packs and cars, then a European assembly plant, before opening a new US assembly plant.

 

Tesla put up a Supercharger about a mile and a half from here and there were two S and a 3 nesting there as I drove by.

 

A site. I've never seen single Supercharger station, do they have them?

 

6 was the smallest quantity we've seen - & it was out in the boonies so many miles away from the entrance of Brice Canon /National Park Utah. And there was another tesla charging when we were there.
EDIT
oops - bad memory - it was 4 stalls - just looked it up.
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Strange email newsletter in my inbox: Says Tesla model 3 now available to order and ordered today would be available as soon as 1 - 3 months. ...
Not that I have any interest in actually buying a Tesla.

Here's what I don't get. This year's EV report card says Tesla has only delivered about 25k model 3's for entire first half of year, Jan to June '18 June 2018 Plug-In Electric Vehicle Sales Report Card

And wasn't there 450,000 with deposits to get a model 3 at one time? But, they've probably only delivered maybe 50k model 3 altogether I suppose. So, how could a model 3 ordered today be ready for delivery in 1 - 3 months? Did most of those 450k reservations disappear?