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Tesla Has Amazing Production Volume
Elon Musk and Tesla achieved volume production with the Model 3 in 2018. No other EV manufacturer has reached the volume that Tesla has. BYD is probably the second closest company, in China.
Elon states the importance of manufacturing and reaching volume production. Tesla Giga Shanghai as been the quickest ramp of volume production for Tesla, after Tesla Fremont. Even with the over 1 million vehicles a year run rate that Tesla has, there is much more that Tesla needs to do to get to 20 million vehicles per year.
There must be innovation in manufacturing - that is the #1 most important thing for Tesla to achieve - even more important than any design. Elon Musk says, "Prototypes are easy, volume production is hard." You rarely hear Elon Musk say anything besides volume production is hard - and not just hard, but excruciatingly hard.
When you see that something is hard for Elon Musk and Tesla, you have to imagine that it is almost impossible for any other company to do. Why doesn't Elon Musk help other companies reach volume production to transition the world to sustainable energy faster? The world is mostly battery constrained for EVs and all companies would compete for scarce resources. Tesla makes the best EVs and they deserve the batteries right now.
Volume Production With EVs
China companies seem to be at about 10,000 units produced a month with the BYD Dolphin just reaching that recently. It will be interesting to see if those companies can reach volume production, which would be 100,000 or more a month.
It gets harder after 10,000 a month. Tesla saves costs by removing radars and lumbar support, or gear levers. But the capital equipment is also a cost. A factory that produces 4 times as many units can generate much lower operating costs and deliver much more savings. Tesla has already hit 80,000 vehicles a month even without new manufacturing processes.
I think the 500,000 a year run rate for Giga Berlin is a big sandbag for Tesla. That means I think Giga Berlin will do way more than 500,000 a year in volume production. Tesla continues to innovate manufacturing and I think Giga Berlin will get closer to 2 million units per year.
Chinese EV manufacturers need to cut costs in order to compete, however, they don't have the manufacturing volume and prowess that Tesla has. Legacy auto will have an even more difficult time as they transition away from their ICE vehicles.
VW has a plant in Wolsburg, Germany, which manufactures around 1 million units per year. This is 70 million square feet. The footprint of Giga Texas is 1/5 the floor space. Giga Texas will likely hit 2 million vehicles per year, which will make it 10 times as efficient as VW's plant - and this is just a rough estimate.
If other EV companies are going to build a significant number of EVs, they are going to have to build very large factories. Tesla has already done this with Giga Berlin, Giga Shanghai, and Giga Texas. They have these factories built and have a huge head start and already have a huge manufacturing and technology lead.
Will Tesla continue to reach volume production in Giga Texas and Giga Berlin? Will other companies reach volume production?
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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