Tesla heading to 8000 model 3’s per week and production of $35,000 Model 3

Eric Markowitz and Dan Crowley of Worm Capital had a visit to the Tesla Gigafactory.

They believe that Tesla will be able to sustain—weekly production rates of 6,000 Model 3 battery units per week, and with new Grohmann Engineering machines will be able to scale to about 8,000 / week with minimal additional capital investment.

Grohmann Engineering will help module production become three times faster, and three times cheaper according to Martin Viecha, head of Tesla’s investor relations. Their new system will be sent to the Gigafactory by the end of Q3 or beginning of Q4. The Grohmann machine will be in Zones 1, 2, 3, and Tesla will be receiving three machines. The process was designed to alleviate the previous bottleneck in module production which delayed Model 3 production significantly. The machine is already built, and points to the advantage Tesla will have in building future Gigafactories.

Production rates at Tesla’s Fremont facility also appear on track for Tesla to achieve high Model 3 overall production output. Similar to our experience at the Gigafactory, Fremont appears to be on track as well. George Galliers, an analyst at Evercore ISI who visited the facility in August, concluded that he “did not see anything to suggest that Model 3 cannot reach 6k units per week and 7k to 8k with very little incremental capital expenditure.

● As of mid-2018, the Gigafactory is now the highest-volume battery plant in the world, according to Tesla. It currently produces batteries at about 200 million per quarter, closing in on a one-billion per year production rate. Tesla now produces more battery capacity than all other car manufacturers combined, including China, with a run rate of approximately 20 gigawatt-hours.

● Tesla will likely achieve a battery cell cost of $100 per kWh by the end of the year, so long as commodity prices remain stable.

Production of $35,000 Model 3 within eight months and Tesla Semi trucks by 2020

● Tesla will likely start producing the shorter-range Model 3 in the next eight months. Right now, they are focused on selling higher-margin cars where demand continues to exceed what is being produced.

According to Tesla, by next year they will start exporting Model 3s to other countries. They will also begin to earnestly produce Semis by 2020.