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2016 Tesla Production Target Stays Intact

Originally published on CleanTechnica.

Update: Elon just said seconds ago on the conference call that Tesla aims to become the best manufacturer in the world.

The 2nd (or maybe 3rd) major point for me regarding the shareholder letter is that Tesla still has a 2016 production target of 80,000–90,000 for 2016 despite the widely discussed troubles with ramping up Model X production.

Tesla Model X red 2

Tesla Model X & me | Photo by Kyle Field, for CleanTechnica (see the sidebar for more pics, stories, and a video)

As a shareholder, I’m relieved, but I’m also a bit nervous still — seems we’re not out of the woods if Elon is standing at the end of the production line (see link above).

The somewhat confusing thing is how Tesla is going to jump from 80,000–90,000 vehicles produced in 2016 to 500,000 produced in 2018. Clearly, the EV mothership is aiming to put a lot of manufacturing capacity online in 2017 (and possibly also 2018 and late 2016), and I think it’s a given that Tesla is deep into a search for sites for Gigafactory #2 and maybe also #3.

But timelines are not always reality. (I know, Tesla fans are cringing a little bit right now.) Still, 2018 is not far away, Tesla must have a pretty clear path to 500,000/year, and perhaps this first comment on my last article best summarizes how the stock market will react and what we can expect:

I doubt they’ll be able to hit the 2018 goal, but I feel like the stock market has come to expect Tesla to miss their estimates by a year or so. So now instead of the stock market expecting 500,000 vehicles in 2021/2022, they’re expecting it in 2019/2020.

At the top, I noted that this consistent 80,000–90,000 aim may be the #3 highlight for me. That’s because something else stood out first (thanks to the way in which the letter was written), but it is something I have highlighted at length in a podcast and perhaps also in writing, so isn’t particularly new: It’s that Tesla is great at increasing the efficiency of its manufacturing process, operations, and capital expenditures.

Recently resigned/retired CFO Deepak Ahuja emphasized this at the end of a quarterly financials call last year, and implied that it was much better than he had seen at Ford, where he worked for a long time prior to joining Tesla, and other big automakers.

Back to those Model X production challenges, though, here’s another snippet from the shareholder letter:

In Q1, we reached a new quarterly production record of 15,510 vehicles, up 10% from Q4. Q1 Model S production of 12,851 vehicles met plan, but Model X production of 2,659 vehicles was insufficient to meet our projected level of deliveries. Our Q1 delivery announcement explained the Model X production challenges and the reasons for them. We are making significant progress in increasing production and plan to continue increasing total vehicle production to support over 50,000 deliveries in the second half of this year. Continuing to ramp high quality production is the top priority at Tesla right now.

We’re all hoping. Well, at least us EV fanatics eager to see human-caused, ridiculously-catastrophic climate change addressed ASAP.

 
Written By

is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy since 2009. Aside from his work on CleanTechnica and Planetsave, he's the founder and director of Solar Love, EV Obsession, and Bikocity. Zach has long-term investments in TSLA, SCTY, FSLR, SPWR, SEDG, & ABB. After years of covering solar and EVs, he simply had a lot of faith in these companies and felt like they were good companies to invest in as a portion of his retirement strategy. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.

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