Telsa Suppliers Warn Musk Expansion Goals Are "Implausible"
By Tyler Durden
Having cashed out a few hundred million dollars worth of stock to some dliuted greater fools – with the help of Goldman Sachs – the ugly face of reality of descending on Elon Musk and his government-subsidized car maker. As Reuters reports, Tesla suppliers are loudly questioning Musk's production goals as he moved up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned.
Rather shockingly, given the huge demand, automaking consultants and supply executives, who asked not to be identified, admitted that Tesla has still not finalized the Model 3 design and specifications, warning that Musk's goals were “implausible,” in part because Tesla's battery factory in Reno, Nevada, was unfinished; and furthermore, aluminum, lithium and other materials – already in short supply – “could be another limiting factor.”
Tesla Motors Inc has surprised parts makers with plans to move up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned – an acceleration that supplier executives and industry consultants said would be difficult to achieve and potentially costly.
In the past three months, Tesla has told suppliers the company was doubling its original production projections to 100,000 Model 3s in 2017 and 400,000 in 2018, several supplier industry executives familiar with the plans told Reuters.
Tesla has taken 373,000 orders for the Model 3 – which has a starting price of $35,000, about half its Model S – and has said it would begin customer deliveries in late 2017. But it has made no promises, and, on earlier models, customers waited months for delivery.
Citing “tremendous demand,” Chief Executive Elon Musk told analysts on an April call that the company planned to boost total production, including the existing Model S and Model X crossover, to 500,000 in 2018 – two years earlier than its original target and a 10-fold increase over the 50,000 vehicles it made in 2015.
Musk said the Model 3's simpler design, new production hires and enthusiastic suppliers would help the company make its goals. He said Tesla would drop suppliers that could not meet deadlines and would bring more parts production in-house than traditional automakers typically do. He did not specify how much or which parts.
Industry experts said Tesla's new goals were extraordinary and raised doubts it could meet them… “They're aiming to be up and running in 2018, so they have two years – and suppliers are wondering if they'll make that deadline.”
One complication is that Tesla has not finalized the Model 3 design and specifications, said automaking consultants and supply executives who asked not to be identified because Tesla prohibits them from disclosing contract details.
Musk has said the Model 3 design and engineering would be complete in June, 13 months ahead of the planned production startup.
Under ideal conditions, automakers have launched new assembly lines in 18 months, but they typically take two to three years after the first tooling and supply contracts are signed, several manufacturing consultants said.
The handful of North …read more
Source: Telsa Suppliers Warn Musk Expansion Goals Are "Implausible"
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