Tesla Motors and its CEO Elon Musk consistently push the envelope, seemingly as part of the company’s culture. When Tesla announced it was going to ramp up the Fremont, California factory to produce 500,000 vehicles in 2018, two years ahead of schedule (and just after the eruption of pre-order reservations for the mass-priced Model 3 in April 2016), automotive experts lined up to say it couldn’t be done.
But maybe the doubters should hold back. A report by global research and consulting firm Cairn ERA shows Tesla’s growth-rate goal has already been exceeded by three Chinese auto manufacturers, according to Electrek, indicating that what Tesla is attempting can be done.
“Based on our analysis, three of the top ten car companies in China reached or exceeded the growth rate that Tesla will need to reach over the next three years. We think the most likely scenario is for Tesla to produce 450,000 cars in 2018,” said Cairn ERA Managing Director Sam Jaffee in an email to Electrek.
The Chinese car market grew from 1.4 million cars sold in 2000 to 24 million in 2015, almost all manufactured in China. When Cairn ERA surveyed the top ten Chinese car makers, the average growth rate was 85.9 percent. Using that more conservative figure would calculate Tesla producing only 340,000 cars in 2018. However, Jaffee believes Tesla will be able to beat the Chinese growth model and that’s why he predicts 450,000 vehicles.
Jaffee explained why Tesla could even outdo the Chinese carmakers in rate growth — electric cars are simpler to put together. “The reason is the nature of the product. The Tesla Model 3, which will comprise the majority of Tesla vehicles manufactured in the year 2018, is a significantly cheaper car to assemble than any of the Chinese cars made by the ten automakers surveyed in this study. Tesla has revealed that there are approximately 8,000 discrete parts in a Model 3. Any internal combustion vehicle, even the cheapest sub-economy model, will have at least 20,000 discrete parts. An internal combustion engine (ICE)-based drivetrain is and always will be dramatically more sophisticated and complex than any electric drivetrain vehicle.”
While 450,000 is an impressive production number, it still isn’t the 500,000 annual vehicle production goal Tesla and Musk have thrown down. Jaffee stated that Tesla producing 500,000 vehicles in 2018 is “plausible, if aggressive.” Electrek, however, observed, “To get to a production rate of 500,000 cars in 2018, Tesla would actually have to grow at only 30 percent of the rate its Chinese peers were able to reach during their strongest three-year period of growth.
- Tesla’s Model 3 currently costs $38,000 to produce but will sell for $35,000
- Elon Musk breaks ground on the first Tesla factory outside the U.S.
- Elon Musk hails ‘incredibly historic quarter’ as Tesla reveals profits
- Tesla cuts workforce by 7 percent, ends referral program to trim costs
- Tesla cuts prices by $2,000 to offset reduced tax credit