Credit: Tesla Fremont factory. Image source: Tesla Motors.
Tesla Fremont factory. Image source: Tesla Motors.
But the vast amounts of warehousing in the factory highlighted a key missing component: square footage dedicated to its late 2017-slated, lower-cost, higher-volume Model 3, which Tesla anticipates will help take the company from an annual production rate of 100,000 to 500,000 by 2018, thanks to a larger market at the vehicle's $35,000 price point (about half the starting price of its more expensive Model S and X vehicles).
To be fair, Tesla has already made some preparations for the Model 3. Its new paint shop, which Tesla doesn't show the public, is capable of painting up to 10,000 vehicles per week. Tesla's stamping center for Model 3 is also already on the line, currently stamping pieces for Model S and X but ready to contribute to Model 3 production next year. Furthermore, Tesla's unique just-in-time construction of its Sparks, Nevada-based Gigafactory , which will be purposed to build batteries for Tesla's growing vehicle and energy storage sales, is also on target to support the beginning of Model 3 production in 2017.
Tesla's new Italian-made press stamps body pieces for Model S and X today but is ready to be a workhorse for Model 3. Image source: Tesla Motors.
However, there was no sign of construction of the new Model 3 body and general assembly centers that Tesla says it will begin before the end of the year.
But the lack of Model 3 tooling at Tesla's Fremont factory wasn't necessarily a surprise. Tesla said in a recent SEC filing that it is currently planning to raise additional funds by the end of the year through an equity or debt offering to be used "primarily for tooling, production equipment and construction of Tesla's Model 3 production lines, equipment to support cell production at Tesla's Gigafactory, as well as new Tesla retail locations, service centers and Supercharger locations."
In other words, Tesla won't be making any significant progress on tooling and production equipment for Model 3 until it raises more money later this year.
Robot arms assemble Tesla's Model X. Image source: The Motley Fool.
Overall, a tour of Tesla's car factory highlighted both the company's fast rate of growth and its huge challenge to prepare for Model 3. Tesla's ability to grow its business in recent years undoubtedly deserves some recognition. Before it launched Model S in 2012, the company was delivering only about 100 of its sporty Roadster vehicles per quarter. And just four years later, Tesla has achieved an annualized production rate of 100,000 vehicles. But increasing annual production from 100,000 to 500,000 vehicles in about two years' time will likely be accompanied by a whole new set of challenges.
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Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
