|
 In the past three months, Tesla has told suppliers the company was
doubling its original production projections to 100,000 Model 3s in
2017 and 400,000 in 2018, several supplier industry executives
familiar with the plans told Reuters.
Details on Model 3 production projections have not been reported
previously, and Tesla did not break out target volumes for the Model
3.
Tesla has taken 373,000 orders for the Model 3 - which has a
starting price of $35,000, about half its Model S - and has said it
would begin customer deliveries in late 2017. But it has made no
promises, and, on earlier models, customers waited months for
delivery.
Citing "tremendous demand," Chief Executive Elon Musk told analysts
on an April call that the company planned to boost total production,
including the existing Model S and Model X crossover, to 500,000 in
2018 - two years earlier than its original target and a 10-fold
increase over the 50,000 vehicles it made in 2015.
Musk said Tesla told suppliers to prepare for Model 3 production
tests in July 2017, a goal he acknowledged may be unrealistic for
some. But he said the "aggressive" target was necessary to reach
production goals.
"Now, will we actually be able to achieve volume production on July
1 next year? Of course not," he told analysts.
"The reason is that even if 99 percent of the internally produced
items and supplier items are available on July 1, we still cannot
produce the car because you cannot produce a car that is missing 1
percent of its components,” he said.
Musk said the Model 3's simpler design, new production hires and
enthusiastic suppliers would help the company make its goals. He
said Tesla would drop suppliers that could not meet deadlines and
would bring more parts production in-house than traditional
automakers typically do. He did not specify how much or which parts.
"It's very important for us to have the ability to produce almost
any part on the car at will because it alleviates risk with
suppliers," Musk told analysts.
Industry experts said Tesla's new goals were extraordinary and
raised doubts it could meet them. The handful of North American auto
plants capable of building 500,000 vehicles a year are all run by
automakers with decades of experience, they said.
Tesla continues to have delivery delays for its Model X SUV. Its
Model S also missed delivery targets when launched.
SPEEDING UP ASSEMBLY
One complication is that Tesla has not finalized the Model 3 design
and specifications, said automaking consultants and supply
executives who asked not to be identified because Tesla prohibits
them from disclosing contract details.
Musk has said the Model 3 design and engineering would be complete
in June, 13 months ahead of the planned production startup.
Under ideal conditions, automakers have launched new assembly lines
in 18 months, but they typically take two to three years after the
first tooling and supply contracts are signed, several manufacturing
consultants said.
Fiat Chrysler Automobiles <FCAU.N>, for example, is converting a
Sterling Heights, Michigan sedan plant to make 300,000 Ram 1500
pickups a year, a 50 percent increase in capacity.
[to top of second column] |
"FCA already has the talent and the money, and the underlying machinery is
already installed in the plant," said one longtime supply sales executive.
"They're aiming to be up and running in 2018, so they have two years – and
suppliers are wondering if they'll make that deadline."
Tesla says the Model 3 features 6,000 to 7,000 unique components, fewer than the
typical automobile with a combustion engine and the Model S, which has more than
8,000 parts.
The company still is soliciting bids for parts and machinery, according to
representatives from several of companies that have received them, as well as
industry consultants who monitor such bids.
Automaking consultant Ron Harbour of Oliver Wyman said increasing production at
the Fremont plant to 500,000 vehicles in 2018 would require more stamping,
welding and assembly machinery that "could take up to 18 months to order and
install."
He said Musk's plan to make parts in-house can minimize risk, but it also can be
more expensive and distracting.
Tesla's production push comes at a time of high demand for machinery and tooling
created by a surge in product launches coming from established automakers, said
a Detroit-based supplier sales executive.
Jeff Schuster of industry forecaster LMC Automotive said the goals were
"implausible," in part because Tesla's battery factory in Reno, Nevada, was
unfinished.
Aluminum, lithium and other materials - already in short supply - "could be
another limiting factor," said Sam Fiorani of AutoForecast Solutions.
Earlier this month two top manufacturing executives left the company. Last week,
Tesla said it had hired Peter Hochholdinger, formerly of Volkswagen AG's Audi
brand, as vice president of vehicle production.
Tesla may pay a premium for work to speed up the Model 3 production launch,
supplier executives said. The company has increased its 2016 capital spending
forecast by 50 percent to about $2.25 billion.
On Wednesday, Tesla announced it would sell up to $1.7 billion in new common
shares, in part to pay for machinery and engineering for the Model 3.
"I'd be really surprised if he can launch production by next July," said Frank
Faga, a Detroit-based auto manufacturing consultant. "But this is a guy who says
he's going to Mars. Who am I to say he can't do this?"
(Additional reporting by Hyunjoo Jin in Seoul. Editing by Joseph White and Lisa
Girion)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
