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Published on December 19th, 2013 | by Christopher DeMorro

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Tesla Will Be Able To Produce 35,000 More Cars/Year With New Equipment



Originally published on Gas2.

tesla-model-s-being-built

The Golden State used to have many car factories, though these days there are few companies actually building cars in California. Tesla Motors, however, calls Cali home, and they’ve brought a surge of money and jobs into the Bay Area with the successful launch of the Model S. To help boost production, California is giving Tesla a substantial tax break.

California is allowing Tesla to forgo $34.7 million in sales and use taxes on $415 million worth of new manufacturing equipment. The equipment will help Tesla increase production of the in-demand Model S, and Tesla expects to build over 21,000 units this year. However, the old NUMMI factory Tesla shares with Toyota has the capability of building many, many more cars than that. The new equipment will allow Tesla to put another 35,000 units per year into production.

Unlike many states, California heavily taxes the purchase of manufacturing equipment, keeping many big companies from having production facilities there. However, California uses the tax as a way to encourage cleantech startups, like Tesla, buy forgiving these hefty taxes, as well as giving grants encouraging production of vehicles like the Tesla Model X. This is at least the second time Tesla has used such tax breaks to save money, and while they could arguably save even more by going to a lower-cost state, Silicon Valley seems like the place Tesla belongs.

Whether or not Tesla can actually totally fill out production volume at the NUMMI plant remains up in the air, as the facility is theoretically capable of producing hundreds of thousands of vehicles per year. At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.

Source: The San Francisco Gate

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About the Author

Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. When he isn't wrenching or writing, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.



  • Matt

    Having a little trouble parsing the head line and story.
    Story – Making 21,000/yr and “The new equipment will allow Tesla to put another 35,000 units per year into production.”
    So is it 35k cars/yr after new equipment or is it 56k cars/yr? The second more than doubles (closer to triples) the production capacity!

    • Jouni Valkonen

      Actually the correct figures are that today Tesla’s capacity is 600 cars per week. This will expand the production capacity to 1300 cars per week. So the total production capacity should be above 60 000 cars per year.

  • Marion Meads

    Am only waiting for Tesla to build mass affordable EV cars that have a range of 200 miles or more and priced comparable to the Chevy Spark EV. As it is, if all of these production are geared towards luxury cars or very pricey cars, then it is boring business as usual, and Elon Mush would have failed in his goal of producing mass affordable cars. The State and Federal government should attach it as a condition, it seems like Elon Musk is now dragging his feet when it comes to mass affordable EV cars.

    • Bob_Wallace

      I suspect Elon would love to be able to introduce an affordable EV right now. That one has yet to appear most likely means that they can’t make one yet.

      Based on what you posted on GM Volt replacement batteries it looks like we’re getting close. $2k for 40 EV miles would mean a 200 mile battery for ~$10k. Someone could build a nice 200 mile range EV for $30k if they had a $10k battery, I would think.

      I took a look on the GM parts site and a new Impala engine (low end) is $4.3k. That doesn’t include fuel, cooling and exhaust systems. So $10k for a battery isn’t much more than the cost of all the ICE gear in a gasmobile.

      If battery prices are truly getting as cheap as they seem to be getting then it will be necessary to build a lot more battery manufacturing before releasing a $30k, 200 mile EV. Demand would be crazy and not being able to supply because of battery shortage would be a real problem.

      I’m sort of guessing that Tesla is using growth in S sales to drive battery manufacturing capacity to the point where batteries will be able to keep up with demand.

    • RobS

      Musks Business plan is proceeding exactly as he outlined it a decade ago, the timeline has slipped by about 2 years in total, hardly unreasonable in a market as tough to enter as auto manufacturing.

      • Bob_Wallace

        If you add in the 2008 Great Recession it makes the two year slippage more reasonable.

        Tesla lost some months early on with the Roadster when they company that had contracted to build the transmission delivered an inferior product and Tesla had to move the job in house.

    • Johnny Le

      Dragging his feet? You do know the model S, their first car, just came out in late 2012, right? Now he has 60 supercharging stations around the world, not to mention stores and service centers. That all comes from the profit of selling the model S. It’s not very profitable to sell affordable ev cars and he has to have all the support systems in place, supercharging stations and service centers, before the mass-market cars come out. Otherwise, how is he going to support all of those cars on the road?

      How fast do you expect a company to grow anyway? They produced 21000 cars this year and if they can make 56000 cars next years as plan, then they almost triple their capacity. If your company grows at that rate, it’s a blessing. You can’t go from producing 0 to 200,000 over a year and if you can’t, why would you want to have a car that everyone is going to order? To have millions of people complain about not getting their cars in time on a daily basis?

      • Marion Meads

        How many times did Elon Musk stated that it will be available sooner? They have postponed the production of mass affordable cars several times over. The fact remains, Tesla failed and didn’t delivered as promised no matter how you sugar coat this.

        Tesla can redeem themselves by delivering the mass market affordable car ahead of everyone else. But meanwhile, their focus has been on to the more lucrative richie ritz folks market, which is very limited and will not have significant global impact except for the inspirational powers of electric cars. The real contribution would be when they can manufacture cars that majority of the public would be able to afford. I’d like to be proven wrong if Tesla can really deliver, especially having acquired the new equipment.

        I’m not pulling facts from thin air, so that you know:

        http://www.thestreet.com/story/12145609/1/gm-six-years-ahead-of-tesla.html

        “The main product goal for Tesla is to deliver the cost-reduced, smaller version of the current Model S. This car would have a range of 200 miles (when new) and cost something like $40,000, before tax adjustments.

        Originally, this “Generation 3″ $40,000 Tesla car was meant for 2015. Then it became 2016. Now it looks like perhaps 2017. Judging from the commentary on a recent Tesla quarterly earnings call, Tesla remains mostly busy perfecting the current Model S, and finalizing the Model X which could reach volume production as early as 2015. Significant resources spent on the “Generation 3 program” would begin in 2014.”

        • Crocket

          I love reading these old comments and seeing how people just don’t understand the company and don’t understand the car market. “Tesla failed,” lol.

  • Scotland

    Good article but I’m not sure about the last sentence.

    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99>>At the rate Tesla is going though, it won’t be long before they look to expanding (sic) to an all-new facility.

    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99
    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99
    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99
    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99
    At the rate Tesla is going though, it won’t be long before they look to expanding to an all-new facility.
    Read more at http://cleantechnica.com/2013/12/19/tesla-will-able-produce-35000-carsyear-new-equipment/#0eIFXZ8pZHIZX6ew.99 If Tesla is making 21,000 units for the year in 2013, that’s a rate of less than 2,000 per month for the Model S. They have said they are supply constrained and could sell more cars (for other markets world-wide). However, even if the Model X is available late next year (let’s assume it has similar sales figures to the Model S) and they have an increased sales presence and availability worldwide, they would be hard pressed to need more capacity than the Fremont plant could offer.

    According to wikipedia (not always the best source but it has a source reference for this stat), over two decades of production, the NUMMI plant averaged 6,000 vehicles produced per week – that’s 300,000 per year. So that would be almost 15 times what Tesla is currently producing/selling.

    Even under the most aggressive plans, they would not see this level of vehicle sales volumes until the lower cost model hits (2017-2018?) and it would have to be an immediate, runaway success. The lower cost model would need to sell 200-250,000 units per year. Maybe a fourth model – a high-volume truck design – would potentially require more plant capacity. Of course, all of this also assumes that the competition does not react and start building electric cars across their entire range – so an expansion to an additional plant would be expensive and risky, in any case.

    • Scotland

      Sorry – Wish there was editing capability – had some cut and paste issues on the quote (reason it copied multiple times)

      • Bob_Wallace

        There’s no “Edit” right below your comment?

        Try a reload. You should see “Reply, Edit, Share”.

        Disqus stutters from time to time for some unknown reason.

        • Bob_Wallace

          Hummmmmmmm……

          There’s no Edit below my comment. Disqus must be having a bad day.

          • http://zacharyshahan.com/ Zachary Shahan

            yeah, i’m also confused, because i normally see Edit. maybe they’ve changed it?

          • http://zacharyshahan.com/ Zachary Shahan

            oh, well, i do see an edit option on mine now. :D

          • Bob_Wallace

            Edit is working on other threads.

            Who knows?

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