Tesla plans to make 500,000 cars per year by 2018 and one million cars per year by 2020

Elon Musk and Tesla Motors are advancing the Model 3 build plan substantially, and just the overall volume plan, with Tesla aiming to get to the half million unit per year run rate in 2018 instead of 2020. And this is based off of the tremendous amount of interest received for the Model 3, which I think is actually a fraction of the ultimate demand once people fully understand what the car’s capable of and are able to do a test drive.

Tesla would then plan to have around a 1 million car per year production rate in 2020.

Tesla would need to triple the total planned battery output of the Gigafactory to ~105 GWh of cells and ~150 GWh of battery packs – or over 3 times the current total li-ion battery production worldwide. The new potential total capacity would be based on the current planned factory of 13 million sq-ft – with no expansion needed. Tesla and Panasonic, the automaker’s strategic partner in the Gigafactory, will manufacture a new 20700 cell format – compared to the current 18650. The battery cells will be a bit larger than the current cells.

One third of the Gigafactory production would go toward Tesla Energy products for energy storage, Powerwall and Powerpacks, and two thirds toward battery packs for Tesla vehicles.

Elon Musk said that he wants to turn the Gigafactory into a product itself: a machine building machines.

Tesla has a lot more land around the Gigafactory so further expansion at the site is planned as well

The higher Model 3 volume is the biggest change strategically. Tesla is going to be hell-bent on becoming the best manufacturer on earth. Thus far, Elon Musk thinks they have done a good job on design and technology of their products.

Tesla should comfortably reach 89,000 car deliveries this year.

The date Tesla setting with suppliers to get to a volume production capability with the Model 3 is July 1, 2017.

Now, will Tesla actually be able to achieve volume production on July 1 next year? Of course, not. The reason is that even if 99% of the internally produced items and supplier items are available on July 1, they still cannot produce the car because you cannot produce a car that is missing 1% of its component. Nonetheless, they need to both internally and with suppliers take that date seriously.

Tesla aims to produce 100,000 to 200,000 Model 3s in the second half of 2017. If you place your order now, there’s a high probability you will actually receive your car in 2018.

The design of the Model 3 lends itself to high-volume production very efficiently. It is being designed for easy high volume manufacturing.

The Tesla battery cost is now under $190 per kilowatt hour. Battery costs will go down another 30% when the Gigafactory is online.

Telsa has almost completed the design of Model 3. And in fact, the prototype that was driving at the [Motor Event] at the end of March was actually using the production drivetrain. So they feel pretty good about engineering completion of the last items for the Model 3 probably within six to eight weeks

SOURCES- Tesla Motors Conference call, Seeking Alpha

About The Author