Tesla zips by weekly output target

Plant production for electric sedan picks up pace

7/11/2013
BLOOMBERG NEWS
Elon Musk, co-founder and chief executive officer of Tesla Motors Inc.,  said the company is building electric sedans faster than its initial 400-a-week goal. The aim for late 2014 is 800 a week.
Elon Musk, co-founder and chief executive officer of Tesla Motors Inc., said the company is building electric sedans faster than its initial 400-a-week goal. The aim for late 2014 is 800 a week.

Tesla Motors Inc. is building Model S electric sedans faster than its initial 400-a-week goal as demand and the company’s production skills increase, Chief Executive Officer Elon Musk said.

“We’re above 400 a week at the current manpower, and not trivially above it,” Mr. Musk said Wednesday at the company’s plant in Fremont, Calif., declining to elaborate ahead of Tesla’s release of second-quarter results.

In late 2014, the pace is “going to 800 a week. I’m very confident we’ll get there,” said Mr. Musk, who is Tesla’s biggest investor.

The electric-car maker’s struggle to reach the output target last year led it to miss a 5,000-car delivery goal for 2012, and its fourth-quarter loss widened after the company had to add temporary workers and resolve supplier snags. Mr. Musk has forecast Model S sales will reach 21,000 this year, with deliveries to Europe and Asia having begun in the second half.

Shares of Palo Alto, Calif.-based Tesla have tripled this year as the popularity of its $69,900 Model S sedan helped bring a first-quarter profit this year, the company’s first. Tesla’s factory has 3,000 employees, including about 2,000 assembly workers, with two daily production shifts, Mr. Musk said.

“It will be interesting to see how far they can improve assembly-line efficiency because these guys aren’t a division of GM or some other big carmaker,” said Karl Brauer, an analyst for Kelley Blue Book, an industry pricing and data provider in Irvine, Calif. “They can’t pull on decades of institutional knowledge.”

Tesla’s 5 million-square-foot factory, California’s sole auto plant, has had multiple lives. It opened in the early 1960s as a facility for the predecessor of General Motors Co., closing in 1982. Next it operated as a joint-venture plant for GM and Toyota Motor Corp. from 1984 until 2009. Tesla bought it in 2010 and started building cars there last year.

An employee works on a Telsa Motor Inc. Model S sedan as it makes its way along an assembly line at company's assembly plant in Fremont, Calif., Wednesday.
An employee works on a Telsa Motor Inc. Model S sedan as it makes its way along an assembly line at company's assembly plant in Fremont, Calif., Wednesday.

As a wider range of battery-powered vehicles are added to Tesla’s lineup, the Fremont plant will one day return to its pre-Tesla production level of 500,000 vehicles a year, Mr. Musk said, without elaborating. That was the factory’s capacity in its GM-Toyota period.

Additions to the company’s lineup include the Model X sport-utility vehicle, due in late 2014, and a sedan to be introduced later that’s smaller and cheaper than the Model S as well as a compact SUV. The company has also discussed a next-generation Roadster sports car, Tesla’s first product.

“We going to have every kind of car you could possibly imagine,” Mr. Musk joked. “If it moves, we’ll make it.”

Under Mr. Musk, 42, Tesla repaid a $465 million U.S. Energy Department loan nine years ahead of schedule. Tesla also said in May its first-quarter profit was aided by sales of $67.9 million in California zero-emission vehicle credits to companies it didn’t name.

“While I’ve been skeptical, I’m impressed with what they’ve done so far,” Mr. Brauer said of Tesla. “The list of dead car companies over the last 10 years is long and distinguished — and they’re not on it.”