Tesla’s rise in production rate over the last two years has been quite impressive. Just over two years ago, the Californian automaker was struggling to put together 5,000 Model 3s a week at Fremont. It attracted extreme attention from the TSLA short-sellers. The target was achieved 6 months behind the company’s original schedule.
Tesla on its way to producing 1 million cars per year
In 2018, Tesla managed to manufacture a total of 245,240 cars, which was a company record. Ever since then, they have ramped up the production big time. Today, Tesla is aiming to produce up to half a million cars by the end of this year. Take into consideration the pandemic situation this year, which had forced the Fremont and Shanghai plants to shut down for a few weeks. Also, consider the fact that the Gigafactory Shanghai is in its first year of production, and is not functioning at full force.
Tesla’s Production Ramp-Up
Tesla has been defying all odds this last year. Most of the automobile companies have suffered due to the pandemic, but Tesla has kept growing strong. The Model 3 and Model Y are especially in huge demand with the customer base. Keeping this in mind, Tesla intends to increase production capabilities, taking it in excess of a million units per year. This could happen as early as next year.
The idea of doubling the production rate in a year’s time seems highly implausible. But one has to understand that with the Fremont Factory back at full force, and the Shanghai Gigafactory constantly being upgraded, it won’t be as difficult as it sounds.
One of the biggest aspects of Tesla’s ramp-up is the transition of the company into a capable automaker. They may not always achieve their deadlines, and there have been some quality control issues recently, but they ensure that they stick to their word. A prime example has been the recent FSD beta release. It may have come late, but it is running on the roads right now, and it has huge potential.
Crossing Milestones at will
The ramp-up has helped Tesla bring a sense of normalcy to crossing milestones. There was a time when they were struggling to produce 5,000 Model 3s a week, and that figure simply seems unremarkable now. And that is precisely Tesla’s strength. They look at milestones and then cross them so easily, that even remarkable things seem normal now.
“Making remarkable things seem normal” is Tesla’s mantra, and it works with the public’s perception of the capabilities of electric vehicles over gas-powered vehicles. It might also work with Tesla’s production capabilities.
The process has already begun, according to data from the Chinese Passenger Car Association (CPCA). They revealed that Tesla China was able to produce 22,292 Model 3s in the month of October alone. That amounts to more than 275,000 Model 3s a year. According to leaked sources, Tesla aims to manufacture 550K vehicles next year, 300K of which will be Model 3s. Considering the current monthly rate of production, Tesla is already within reach of this goal. Add to that 12 months of non-stop working of the Shanghai factory, and suddenly, the remarkable figure of 550K once again seems normal. And it would be silly to assume that Tesla will not optimize the Gigafactory further, which once again continues the trend of making milestones seem unremarkable.
Moving Into The Electric Age
Back in 2016, Elon Musk talked about producing 1 million vehicles per year. At the time, he was ridiculed for this goal, mainly because of the fact that Tesla had produced just 50K vehicles that year. Right now, we are talking about a production rate 11 times higher than that, and that too in a single factory. That kind of surge in just 4 years is simply amazing.
If the Gigafactory Shanghai alone produces 550K vehicles next year, then Tesla can realistically aim for worldwide production of 1 million units. Toyota President Akio Toyoda stated last week that Toyota is well placed to retake the throne of the market from Tesla, simply because of the huge gulf in production rates. In 2019, Toyota Motor Corporation manufactured 10.74 million cars. Tesla produced 3.4% of that figure. Despite that, Tesla overtook Volkswagen and Toyota in the space of 6 months to become the most valuable automotive company in the world. Their market value rose from $80 billion in January 2020 to $415 billion in November 2020.
Toyota claimed that it will be harder for Tesla to maintain its top spot, because of the low production rate. But if Tesla goes from producing 50K vehicles a year worldwide in 2016 to producing 550K vehicles in just the Gigafactory Shanghai next year, that wouldn’t be a problem. Of course, it will still be a lot lesser than Toyota’s 10 million+ units. But Tesla’s graph has a very steep slope right now. It won’t be long before Tesla completely lays down the foundation for taking on the gas-guzzling giants currently.