Alright I think I am getting my head around Tesla's ramping of the new factories.
Along with Tesla's factory capacities and alleged capacities.
VOLUME PRODUCTION We all know how vocal Elon likes to be about
volume production, equal or higher to a run rate of 5,000 vehicles a week.
A rate at which no other EV manufacturer in the world has achieved, ok except officially
for the Wuling, but I really don't count that.
It's not the volume production I don't count, it's the vehicle classification, I think it's
a stronger competitor to an electric bike.
Anyway, so EV volume production is Tesla's achievement and Tesla's alone.
Except Tesla haven't stopped at volume production, Tesla have reached high volume production.
FACTORIES And we have these new factories, that claim
to be able to eventually produce a Model Y every 45 seconds.
However, we also hear these factories referred to as a capacity of 1/2 million, in fact that
is what Giga Berlin is currently permitted to in production capacity.
Elon did also say in a Tweet one time that said about 10,000 cars a week with about 75%
uptime, to kind of somewhat further reinforce this particular run rate.
SHANGHAI Now we have been watching the Shanghai Model
Y factory for sometime, since it was just dirt, we watched the factory go up in record
time, and then producing at insane rates.
Up to over 10,000 units in about its third month of production.
FYI, Berlin is now in its fifth month of production, and we are only about half the way of the
Shanghai progress.
BERLIN
However that does look set to change as Giga Berlin is also going to face a two week shut
down, and expected to open back up at twice the capacity, so perhaps at that 10,000 a
month figure.
Which I would also guess must be close to a break even operating profit for that factory.
And that's at the start of the quarter, albeit having to close down for 2 weeks in July.
Either way, we should expect Berlin to potentially be profitable this quarter.
And I would guesstimate a production of 15,000 in September, at the end of the quarter.
I would feel comfortable guessing 25-30,000 Model Ys total for the quarter, which I believe
is more bullish than most estimates.
But still early days, we will have to see the effect of the new upgrade.
But when Shanghai was ramping it saw jumps as high as 10,000 additional units, month
over month.
And we would hope that Tesla can jump faster with all the new manufacturing techniques
and experience they now have.
Anyway, it was actually at Berlin we first saw this production target of one vehicle
every 45 seconds.
But we also saw that the Berlin factory looked bigger than the Shanghai factory, and on top
of that, Tesla need a lot fewer robots and floor space when compared to Shanghai.
I would say Berlin has additional floor space being unused for now, that is for future expansion,
possibly some of it being utilized now with the latest line upgrade.
Perhaps this was foresight seeing the upgrades and expansions they had to do in Shanghai.
Meaning that they can likely upgrade the lines much quicker in the new factories, not that
we have seen that really occurring yet
Elon did say he expected them to ramp faster in these new factories though, he didn't say
that they will take longer to get set up and running.
They are meant to be faster in every capacity.
EXPANDABLE Is it possible that these factories are more
expandable though, and future expansion has been considered.
Texas is already building an extension.
Tesla are going to be upgrading these lines, and extending them, along with the actual
physical building of the factories.
Tesla built as much factory as they needed to get started in producing cars as quickly
as possible.
From there they can build and expand the perfect factory, as they have more time, once the
vehicles have actually started production.
Just like we are seeing now with Shanghai shutting down, and all the continual factory
expansion they have been building.
Whatever the next bottleneck is on the factory floor, will be the next part of the production
line that requires attention, and whatever needs to be done to remedy the bottleneck,
will be done.
Like I'm saying, even if it requires a whole new fab, just for a cathode factory or something.
PAST CAPACITY My point is that Tesla are not going to reach
a run rate of 500,000 units a year, and call it a day, and start another factory.
Every single factory they have, they are going to be refining and improving.
50% GROWTH Elon talks about 50% growth, this cannot be
achieved at a linear rate of building one or two factories every year.
Before long Tesla will have half a dozen locations.
If they build 2 new locations in a year, then that only becomes 33% growth.
I don't think Tesla can accelerate their rate of building factories.
Of course the factories we really are referring to are actually the cell factories, as that
is the bottleneck.
So just to explain again, with easy numbers, when Tesla has 10 factories, if they are building
2 a year then that is a 20% growth rate.
Elon thinks he can maintain 50% for the next 10 years.
Where would the other 30% of growth come?
Again with easy numbers, let's say that each factory produces 1m units a year, and there
are 10 factories, i.e. 10m units a year.
Then with the addition of 2 new factories it increase 20%.
And yes, I know when Tesla builds a new factory it takes a little while to ramp up too, but
I think we are getting too into the details there.
Anyway, if these new factories also produce 1m units a year, sure, I know they need to
ramp up too, but equally last years factories are still ramping, so it is relative.
But it assumes a capacity of 1 million units a year is a cap, and growth comes from building
new factories.
But Tesla can't build 50% more factories every year.
It becomes impossible, the exponentials get too big.
Therefore there is no cap on capacity, at least for the next decade.
In this scenario, it would essentially require the existing factories to increase an average
of about 30% in capacity.
Now that would be 30% each and every year.
Maybe with a 1 year time delay, due to it taking perhaps 2 years to ramp up, and only
one year to build - thus the 1 year discrepancy.
But either way, we have discovered something here.
Now what if Texas Model Y line hits 500,000 next year, like planned, but that line keeps
increasing in speed by 30% each year.
Now actually, I don't think Fremont will be increasing at that rate, nor even Shanghai.
I think it will only be the more modern facilities, with structural packs.
It sounds like there is a lot more potential in those lines, the way they have been designed
for future expansion.
So that by the end of the decade, if Texas did increase at a rate of 30% a year, then
it should be on a run rate of around 2 million units a year.
Now a lot of us, myself included, have commented that the potential capacity of Texas for the
Model Y, is possibly up to 2 million units a year.
And we justify this with all sorts of math, but obviously the sheer amount of 4680 cells,
that have to go somewhere.
Admittedly I think most of us had a time horizon of the next few years for that to occur, but
perhaps it will take the rest of the decade, and it just takes that long for Tesla to improve
the lines to this astonishing speed.
Or is it the fact, that Tesla can just always find ways of improvement?
Right let's not forget that this is an absolutely insane speed to be producing a car.
That is one coming off the line every 16 seconds, and remember, that's per production floor,
per factory.
And Texas has two floors already, don't forget the Cybertruck.
The Cybertruck is a different kettle of fish of course, not need a paint shop and an exoskeleton,
so it will be very interesting to see how that ramp goes.
It will likely change low cost vehicle production as we know it.
SUMMARY So what am I getting at here overall?
Well I think that we need to stay focused on ramping speeds.
Last year in Shanghai Model Y, we saw some months that jumped in production rates over
10,000 units month over month, which at the time was more than 30% jump, just over a month.
The capacities of these building are grossly under stated, but only in a sense.
I am not sure we can actually call it sandbagging, 1/2m is probably a reasonable run rate to
target, within perhaps 12 to 18 months, which is about the time it takes to get the line
running.
Once there, the line is upgraded and expanded continually overtime.
Tesla's factory capacity is like fashion, it's never finished.