With Model 3 Design Locked In, Tesla Still Aims for 500,000 Vehicles in 2018

Tesla Model 3 prototypeFor Tesla, 2018 looms large. That’s when the automaker claims that it will build 500,000 vehicles annually. And Tesla insists that it’s on track, despite recent setbacks. Key to the effort is its upcoming, more affordable Model 3 compact.

“We have completed the design phase of Model 3 and released Model 3 for tooling, production planning and validation,” declared Tesla CEO Elon Musk and CFO Jason Wheeler in a shareholder letter. To scale up production, Tesla will rely on a “machine that makes the machine” philosophy to vehicle manufacturing, aiming toward volumetric efficiency through automation.

“At the time the factory looks like an alien dreadnought, then you’ll know you’ve won,” mused Musk, using language, as he often does, that’s perhaps better recognized at a Star Trek convention than among his actual audience of fund managers on a conference call for investors.

Readying for Model 3 production

As if to immediately address naysayers who’ve declared the Model 3 vaporware, and who often point to Tesla’s long history of product delays, Musk laid out more physical, on-the-ground details. He said some production equipment for the Model 3 is already “on line”—in context, presumably meaning the production line, in Fremont, California—with an initial capacity established at stamping and paint centers.

After a first half of 2016 that Musk characterized as “production hell,” during which the automaker dealt with a number of production delays with its Model X crossover, including an issue with the complex “falcon door” feature, Tesla had a particularly strong June on the assembly line. During the second half of 2016, Tesla now anticipates the delivery of about 50,000 Model S and Model X vehicles.

That’s quite a turnaround from a month ago, when in rounding up its second-quarter results, Tesla conservatively anticipated that worldwide deliveries for the entire calendar year might land near its 2015 total of around 50,000 units, despite the launch of the Model X crossover. Now, the company might reach its earlier forecast that it would deliver 80,000 to 90,000 vehicles. It produced just 29,222 in the first half of 2016.

“We’re right around 2,000 cars a week and we’re trying to balance the mix to be half X and [half] S,” said Musk in the conference call. “We are able to maintain production at that level, and hopefully we can grow that a little bit … a little more in Q4.” He added that his team’s “unvarnished aspiration” is to push beyond 2,000 vehicles a week in the fourth quarter—a pace that would put the 100,000 mark in reach for next year.

A Springboard into the Master Plan

And the Model 3 is only the near-term product on the road to Tesla’s 500,000 sales target; its medium- and long-term goals go far beyond that. With Musk’s release last month of his “Master Plan, Part Deux,” the CEO pointed to a vastly diversified yet vertically integrated vision in which the company would be combined with Solar City, offering power systems for both homes and cars, and with a product portfolio that could include a CUV, a pickup truck, a semi-tractor rig, and a near-autonomous minibus.

Musk also recently mentioned, via Twitter, that the Model Y compact SUV will be based on the Model 3, while the bus/minibus vehicle would be built off the same platform as the Model X.

from Car and Driver Blog http://blog.caranddriver.com/with-model-3-design-locked-in-tesla-still-aims-for-500000-vehicles-in-2018/

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