With more than 276,000 deposits for the Model 3 since launch last week, the car is a runaway success for Tesla, but doubts as to whether Tesla can meet the demand refuse to die down

Last week Tesla dominated motor industry headlines with the launch of its 200-mile-range Model 3 saloon.

Within days, 276,000 refundable deposits had been put down, a level of interest on a different scale even to the Volkswagen Beetle relaunch in 1997, a previous standard-setter in pre-launch mania.

But now the hard work begins. The Model 3 - which costs $35,000 in the US, equivalent to £25,000 here but the UK price has yet to be determined - is the cornerstone of Tesla founder Elon Musk’s plan to ramp up production the Tesla Factory in Fremont, San Francisco, to an ambitious 500,000 cars a year by 2020, with the bulk of them (400,000) being the Model 3.

Given that the Model 3 is not in series production until late 2017, getting near this volume in just 24 months will be a sensation, if only because Tesla has never made more than 50,000 cars per year, a rate that would take six years to clear the Model 3 order backlog. And it's already fallen short of its production targets for first quarter of 2016, delivering 14,820 vehicles; 1180 less than it predicted.

At least there is a minor precedent for this high level of output. Fremont peaked at 500,000 units in a previous life when it housed a joint venture between GM and Toyota called NUMMI (New United Motor Manufacturing Inc), once home of the Geo Prizm, Pontiac Vibe and Toyota Tacoma pick-up.

The Tesla factory retains the same sprawling 300-acre footprint with 5m sq ft of buildings, but ramping back up to 500,000 units of production in just 36 months will set new automotive manufacturing records.

Nissan’s Sunderland factory, for example, is the biggest in the UK and one of the largest in Europe, and it started production in 1984. Yet it took 28 years to reach 500,000 units of output, boosted by the Qashqai in 2012.

Tesla hasn’t yet revealed how it will go from 80,000 units this year to 500,000 in 2020, and whether its two paint shops can once again cope with such high volume.

Taking robotic assembly to a new level?

Engineers have talked about a high level of robotic assembly, but that would be an industry first, too.

It may be standard practice to delegate body assembly to robotic handling equipment and welding guns - Nissan, for example, deploys 828 robots to weld the Qashqai’s body together - but final assembly remains a manual job that requires skill and experience to execute successfully. In the next 18 months, Tesla will have to find and train  a large, new workforce to assemble the Model 3. Some think Tesla will need outside help to make it happen.

It’s also instructive that Nissan, half of the world’s number six car maker (with Renault), has a more measured approach than Tesla’s ambitious pursuit of big numbers.

Sunderland is now one of three global sources for the Leaf, together with a site in Japan and the US. Each plant has modest capacity for 20,000 units a year, adding up to a global potential of 60,000 – the same as the Model S.

Currently the £16,000 Leaf is the world’s best-selling EV with more than 200,000 units on the road, twice as many as Tesla.

Established companies like Nissan won’t be easing up, either. A new, better-looking and longer-range Leaf is expected around 2020, when today’s model will be 10 years old. The swoopy-looking IDS concept has already revealed its future direction.

"We are really showing how we see the future of the next Leaf with that concept," says Gareth Dunsmore, Nissan’s global EV marketing manager.

Battery tech quickly progressing

Volume car makers are also catching up on battery technology, so while Tesla claims a healthy lead in the energy density of its Panasonic battery pack, the IDS concept’s 60kW battery is said to be capable of 300 miles – more like the £60,000 Model S than the £25,000 Model 3.

And there lies another contradiction in the Tesla story. Demand for EVs will no doubt rise; Nissan is predicting 20% in some markets by 2020, but so will the number of models.

Nissan is poised to add an SUV and supermini, models that alliance partner Renault can mirror. By 2018, Audi will have the Q6 e-tron, Porsche the Mission E and VW an EV ‘super-Golf’, while Jaguar and Aston Martin are forging ahead with luxury EVs for 2018-2020. At the other end of the market, Skoda and Seat are accelerating affordable models to production.

All are from established brands, supported by extensive dealer networks with access to plentiful finance, the real battlegrounds of the global car industry.

If Tesla loses its grip on the Model 3 production ramp-up and the waiting list begins to stretch out, customers will have alternatives. That’s not true of the Model S and Model X today.

Tesla will no doubt forge its own path, but it’s difficult not to conclude that the competitive environment is about to get a whole lot more pressurised for Tesla.

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Comments
11

6 April 2016
....who'd have thought 4 years ago they'd be pumping out 60,000 a year?

 

Hydrogen cars just went POP

6 April 2016
They will also need the best supply chain manager(s) in the world to pull this off.

6 April 2016

Out of interest, how many of the A4/C Class/3 Series car are sold at the moment globally? Given the Tesla brand (I can see anyone who used to have a Saab transferrings straight over) I'd have thought they could get a small market share that would be sufficient for them.

As the article says, surely there are a couple of immovable hard points like the paint shop getting up to speed which will define the other decisions.

bol

6 April 2016
They've won either way. What Elon Musk wanted was for cars to be powered by electricity rather than petrol. Can anyone imagine that the world's big car makers have looked at what happened last week and gone "nah, it'll be a flash in the pan, no need for us to worry about that". There'll be ground-up electric cars that have been vaguely slated for 2022 if ever being rescheduled for 2018 all over the world. Thinking that this is all about Tesla is to utterly miss the point. They've moved the industry on, and that's the point. I imagine that this penny will drop at Autocar in about three years' time.

6 April 2016
Regarding Tesla's paint shop, in Tesla's annual report they state quite clearly that "our new high volume paint shop and new stamping lines can support all three [X, S & 3] vehicles". The paint shop is capable of 10k units a week and, hence, can support 500k units a year. This is unlikely to prove the constraining factor.

With respect to the competitive landscape, we need to consider how other OEMs plan to source their batteries. It will take time for them (or there suppliers) to build battery factories to support large EV volumes. Bear in mind, the Gigafactory will produce more lithium ion batteries than the rest of the world combined yet only has capacity to support 500k vehicles.

GWolf

6 April 2016
"Nissan’s Sunderland factory, for example, is the biggest in the UK and one of the largest in Europe, and it started production in 1984. Yet it took 28 years to reach 500,000 units of output, boosted by the Qashqai in 2012."

This comparison doesn't quite stack up. I'm quite sure Nissan could have built 500,000 cars per year much sooner than 2012 had there been sufficient demand for the cars it was building for those first 27 years.

Tesla occupies a factory that has the capacity to process that many cars, and has done so already in the past. It will take a lot of work to return to that level in such an ambitious timeframe given that the tech will be largely new, and it may mean outsourcing some production for a few years, but it's not completely pie-in-the-sky. Korean and Chinese factories have ramped up production of practically every kind of product massively in short timespans in recent history, so there are precedents.

If Musk is serious about his numbers, then presumably the necessary infrastructure investment at Freemont will have already started before the Model 3's unveiling.

7 April 2016
Let's have a production raid test. The rest is pie in the sky.

Lanman

7 April 2016
Road test. And charging time. Battery life. Disposal methods and carbon foot print for real .

Lanman

7 April 2016
Three years ago Autocar said its 'think tank' had concluded that electric cars were a white elephant and anyone who disagreed was invited to a 'full English breakfast' near the Autocar offices so the Autocar views could be explained in full. Autocar clearly has an extremely poor track record in predicting the future of the electric car. At that time, realising that Autocar was anti-electric car, I stopped buying it and now instead read the online journal Green Car Reports which is so much better and more deeply researched.
Martin Dean

7 April 2016
A return to horseback travel is a more realistic proposition for most people than these stupid contraptions. If anything eventually replaces the petrol engine it won't be this rubbish. Electric cars are going nowhere.

I don't need to put my name here, it's on the left

 

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