Tesla to start pilot production on the Model 3 by February 20, volume production in July

By Joel Hruska
On Wednesday, Tesla confirmed it will shut down its California plant to retool it for production of the (hopefully) high-volume Model 3. The brief, planned pause (according to Tesla) is to expand its paint shop, perform general maintenance, and prep the plant for increased productivity
February 20 is Tesla’s target for initial production on the Model 3, according to Reuters. These first vehicles are test construction models, used to hammer out manufacturing difficulties, verify aspects of vehicle performance, and make certain the assembly lines can flow smoothly. Tesla CEO Elon Musk has said more than 370,000 people made down payments on the Model A3, and he intends to begin full-scale production in July 2017.
The stakes are high for Musk and Tesla. The Model 3 has a long waiting list and Tesla only built 83,922 vehicles in FY 2016. I don’t want to sound like I’m minimizing the company’s accomplishments — it shipped 1.64x more vehicles in 2016 than 2015 and that’s a substantial improvement by any measure. But Chevrolet already has the Bolt and Volt in-market, and there’s a substantial argument to be made in that EV’s favor (Bill Howard has the details on the comparison).
Now, before I get mobbed by angry Internet commenters, I’m well aware the Model 3 benefits from a substantial halo effect, Tesla’s excellent battery technology and supercharger system, and a lower MSRP. I’m not arguing that Chevy is going to blow Tesla out of the water, so everyone should cancel their pre-orders.
Tesla’s supercharger network is a selling point in favor of the Model 3. GM has no equivalent.
But, at the same time, Chevrolet has the infrastructure and mass manufacturing that Tesla is trying to copy. Unless Congress changes the rules around EV rebates and extends the program, most of Tesla’s Model 3 customers will never qualify for the subsidies that are seen as key to driving EV adoption. Given President Trump’s strong support of coal, natural gas, and oil over solar or wind power, it’s not at all clear the government will continue any of its funding for EVs or renewable energy technology.
Musk claims he wants to bring vehicle production at Tesla up to 500,000 vehicles per year by 2018, which means the company needs to be selling six times more vehicles than it sold in 2016. That’s an enormous rate of increase — 1.64x per year for both 2017 and 2018 would only give Musk a production rate of 225,716 vehicles per year.
Investors are a bit dubious of Tesla’s promises to begin full production by July, given that the company has typically missed its launch windows. But this one is non-negotiable if Tesla wants to demonstrate that it’s grown up and ready to take on the entrenched auto manufacturers directly.
Tesla to start pilot production on the Model 3 by February 20, volume production in July Reviewed by Bizpodia on 16:28 Rating: 5

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