A lot of people are trying to guess where Tesla's next factory is going to be built,
we hear India, UK, Japan or even Russia has been mentioned.
We all want to know, it's a big deal. Why is it such a big deal,
well it shows more confidence in Tesla's growth, if they are willing to add another giga factory in
a new location. It gives an indication of whether Tesla can continue expanding at a this rate.
However, Elon has said that it doesn't look likely there will be a new factory at a new location
mentioned for sometime, possibly not until about as far as 2024 or so. Well that's quite a while,
and to maintain 50% growth, even if this new factory is up and running in 2025,
it will be tough to get such growth out of the current factories.
Now can anyone recall the next factory Tesla built once the construction of Shanghai Model 3 factory
was complete? It was the Shanghai Model Y factory obviously. Tesla immediately built
another factory next to the previous factory they just built. They expanded on the existing site.
I have touched on this in the past, that as soon as Tesla complete their existing factories,
they will keep going, I mean they even have all the construction crew there, available,
who know the site. Why stop? Aside from supply chain issues with the likes of chips, what is
the bottle neck in manufacturing more cars? It's just going to be the raw materials, because Tesla
are so vertically integrated a lot of their product starts at the level of raw minerals.
We assume that Tesla have secured these materials, as it would have seemed like an obvious move.
The other bottle neck was the amount of batteries being produced, but if Tesla can simply create
more battery lines within each factory, then this is solved too. And we are potentially witnessing
how fast Tesla are able to get up and running a 4680 production line in Giga Texas right now.
Supposedly these production lines are made in Canada by Hibar Systems.
It sounds as if Tesla construct their own production lines for the 4680s. Of course these
production lines are so important it would likely be best to have Tesla engineers producing them.
Of course the other issue is actual demand, its one thing making all these cars, but it may be
another thing selling them, and this obviously does not appear to be an issue for Tesla either.
Therefore, what is stopping Tesla immediately expanding these factories once the first phases
are complete? That's not rhetorical, I would be interested in hearing any legitimate reasons.
I can't see any, I think Tesla should, and most likely will, just keep expanding these existing
sites. And Tesla haven't stopped in Shanghai yet either, we are seeing phase 3 being built
currently. And what we have also heard Elon tweet lately about spending over $10 billion
on the Texas site. Considerably more than what has been spent to date.
The same is true for Berlin, we have all seen the plans for Berlin
to expand to about 4 times the size of the current plant. Berlin is the hub to
serve Europe. When you include the whole of Europe, not just the EU, like the UK,
then the car market is again about the size of China and the US, similar in numbers and revenue.
A lot of people like to speculate that Berlin will hit 2 million vehicles a year. It is estimated
that the current plant is going to be around 500,000 to 700,000 Model Ys a year. A lot of these
estimates are based on Tesla claiming that Berlin will produce a car body every 45 seconds. Which
is pretty much exactly 700,000 vehicles a year. Elon confirms this number on Twitter, and says at
75% uptime this works out at 10,000 units a week, if run 24/7. I think 75% uptime seems quite low,
at least within time, I would expect it to be a higher average uptime though. But either way,
we have a rough idea of capacity for this factory. And if we multiply that by 4
we get to 2 million to 3 million vehicles a year. Which probably is still not enough for
all of Europe. It would only be about about 10% of all cars sold in Europe.
However, I am willing to bet that at least one of these buildings will contain a production line
for the compact Tesla. My thoughts are that this car is heavily designed around mass production.
It is obviously a lot smaller than a Model Y too. I am not entirely sure if it will even have
paint either. Paint shops slow down production. It may be stainless steel. It needs to be suitable
for robotaxis for decades, so Tesla would not want it to rust, stainless steel would avoid this.
We calculated an estimate of 500 to 700 thousand units a year capacity if was just for the Model Y,
using today's manufacturing processes. It may very well be different for the compact Tesla, they
might be able to produce twice as many compacts per square foot as they do for the Model Y.
Of course we also know that the compact cars are the best selling in Europe.
Sure there is the cliche of lots of narrow roads, and difficult parking spots.
And there is some truth in that. But on the other hand, compact cars, well because they are small,
they cost the less to run. And in Europe, gasoline, is expensive. Which is why you will
not see many V8s there. The entire continent has been deprived of high performance cars,
as they simply cost too much to run. Except for those that can afford them. However,
in steps Tesla, with a low cost, high performance car, that costs nothing in the way of gasoline.
So there will be consumers in Europe who will go from compact ICE vehicles to Tesla Model 3s and
Ys, due to the lower running cost. Yet there will also be consumers that do want a small car in size
for the sheer ease of driving something smaller too. Which means the Tesla compact.
I would say that Tesla plan on selling a lot of compacts in Europe,
but I am thinking this will not be until close to 2024. Until Tesla have seriously
ramped up LFP batteries. Unless they start with an earlier version with CATL. But we
need to see them build a massive fab in China first to cater for the compact manufacturing.
I don't think there are enough clues around yet, as to quite speculate on when this may occur.
The clues we have are Elon saying they will not have a steering wheel or pedals, implying we
need level 5 autonomy achieved first. And then Tesla making their own in-house LFP batteries,
and whether they will be required for the compact, which means some significant ramping would
first need to occur. Of course Tesla may offer steering wheel and pedals as an optional extra.
It might take Tesla 3 more years to complete the Berlin site as we have seen planned.
Tesla have been building Shanghai for 3 years now, and are still going. So perhaps Berlin might build
a model 3 facility next, I wouldn't have thought it likely we saw an S, X or Cybertruck line there.
However, possibly a semi truck line. These are big vehicles to have to ship,
and the demand will be backed up for years. By about the start of 2023,
Tesla may start building the factory for the compact Tesla, and it would be complete
in early 2024. Which would all time in with LFP battery production ramped up, and hopefully FSD.
Then there is Texas, with the estimated cost of building being $1.06 billion. But likely
not including machinery. But going by Tesla's financials they have spent around $7 billion
since the third quarter of 2020, which is when construction in Texas commenced.
However, Tesla were also completing the Model Y Shanghai facility, building Berlin, a lot of
other capital expenses, like the megapack factory in California. So perhaps all up,
including everything Giga Austin probably was under $3 billion. And if Elon claims they will
spend over $10 billion on that site, then that will still be some massive expansion to come.
Again, highly possible to see a compact Tesla factory in Texas too.
How many times have we heard Elon say, a factory on every continent. Well multiple
factories consolidated in a single location for each continent. This is what we were told,
and it appears this is what is happening. We have seen plans for Berlin's expansion,
we have heard a significantly higher budget for Texas, and we have witnessed continual
expansion for Shanghai. And we have been told to not expect any new locations any time soon.
Tesla were rumored to buy a massive amount of Land in Shanghai, but later this was put on hold.
Due to trade tensions with the US and China. Tesla do have plans to expand
the Shanghai site, but want to make sure everything is economically sound.
The technology appears to have been achieved, at least for 4680 batteries.
So now all the production lines, for all the 4680 battery power vehicles are being built.
Once the LFP production is perfected, then Tesla can start building the factories for the LFP
vehicles, or namely the compact Tesla. I think a lot of this will be revealed
when Elon tells us the updated road map for Tesla on the earnings call.
This is a big deal, the way I infer it, is Tesla are announcing plenty of more factories,
except they just aren't in a new location. Does it matter that they are not in a new location?
If Elon suddenly said we are building a new vehicle factory in the UK, then that would
have likely bumped the stock price. Because we are seeing confidence in expansion and growth.
However, the fact that we can interpret what is actually being said, as Tesla announcing new
factories, just next to the existing ones, doesn't seem to affect the stock price in the slightest.
But what's the difference? These factories are hubs for the continents. These sites have only
gotten started. Imagine if they eventually link up through boring tunnels to other various Tesla
hubs. There is still so much future for this company, as I say, it's barely begun.