Tesla Sending Shanghai Staff to Fremont - Why?

Tesla is sending a couple hundred employees from Giga Shanghai to Fremont, CA. The reason for this is to get Fremont to increase output by 50%.

Tesla Sending Shanghai Staff to Fremont - Why?

Tesla is reported to be sending hundreds of employees from Giga Shanghai to Fremont, CA. Why is this happening?

Fremont is Tesla's original factory and has undergone many changes since starting. This was a factory that General Motors and Toyota once used the now 60 year old factory. With the announcement that employees are headed to Fremont, that tells me they are doing some consulting to try and get the factory to be more like Giga Shanghai and Giga Berlin and what it would take.

It would take quite a bit of work to upgrade the factory to be like Giga Shanghai and Giga Berlin (and Giga Texas). Fremont is 60 years old and is not setup in the way Tesla's new factories are as far as layout goes. Still, Tesla has been able to output a tremendous amount of vehicles from Fremont even so.

It's a good idea to cross pollinate the factories in order to share knowledge. It may even be an interesting exercise to have some Fremont employees go overseas to Giga Shanghai to share knowledge of things learned there.

I think the learnings will help Tesla reduce costs of the EVs made in Fremont as manufacturing and other practices are shared with the teams there. I don't think Tesla will lower their prices, mind you, but their costs to produce them will go down.

Future of Fremont

Most people have probably forgotten about the Fremont factory and something Elon Musk said that is very important in the Q3, 2022 earnings call. Elon said that Tesla wanted to increase production at the Fremont factory by 50%. That's a large number and that's not going to happen easily.

We are talking about a massive ramp up of vehicle production in the Fremont, CA factory, which is generally seen as a very crammed and crowded factory. How are they going to increase output by 50%?

I think the onsite staff are going to look at automation and manufacturing practices and see where things can be streamlined, miniaturized, and sped up. Those are the areas in which Tesla will be able to make this happen. There isn't any more space to be used at Fremont - it's all about making changes with the space available.

Tesla produces about 100,000 Model S/X, and 550,000 Model Y/3 at Fremont. Tesla is probably going to do the same thing they are doing at Giga Shanghai. What they are doing is they increase production from about 15,000 vehicles per week to 23,000. They did this by changing existing production lines.

They had to shut down the factory in July and early August while those upgrades were being done. That's an 8,000 vehicles per week increase. That's very impressive. Right after they did that in Giga Shanghai, there was that big increase and I expect Fremont to have that as well.

The Giga Shanghai employees are probably going to install the same upgrades to the Tesla lines at Fremont, which will increase production in a similar way to China. By then, they may start using structural battery packs from CATL, in standard range vehicles. A Model Y for $45,000 to $50,000 may be possible (if Tesla chooses to sell them for that much).

Will Tesla reduce the prices of their vehicles with these upgrades?

For more information, see this video by the Electric Viking:

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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.

Image Credit, The Electric Viking, Screenshot