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Tesla Will Achieve New Level Of The Production Rate, Not Only Adding New Giga Locations

by Eva Fox May 20, 2020

Tesla Will Achieve New Level Of The Production Rate, Not Only Adding New Giga Locations

Tesla is a fast growing company that has a 17% share in the global electric vehicle market. Demand for the company's cars is growing at a very fast pace, which forces Tesla to raise the question of where and how the further increase in production will take place.

ARK Invest, in its weekly newsletter, helps to take a broader look at this issue. Investors often wonder how many Gigafactories Tesla will have to build in order to sustain or increase their share in the global electric vehicle market and meet their expectations.

According to ARK Invest, this question suggests that Tesla faces several constraints in its ability to scale:
  • Battery production
  • Management bandwidth
  • Vehicle painting

But ARK Invest do not agree with these constraints, because all these "constraints" may disappear within a few months.

The company’s analysts suggest that Tesla’s CEO Elon Musk will probably tell how the company will scale to terawatt-hour levels of capacity, eliminating the first constraint.

On Thursday, as Tesmanian previously reported, Reuters released part of its expectations that they thought should be presented on Battery Day. The most notable rumor is that Tesla can introduce Model 3 in China at the same price as comparable gasoline cars this year or early next year, that is, a year or two earlier than ARK Invest expected.

"To achieve price parity, Tesla supposedly will use cobalt-free lithium iron phosphate batteries for which China’s CATL (Contemporary Amperex Technology) will charge less than $ 60 / kWh. At that cost, ARK estimates that a Model 3 with a 75kWh battery pack could cost for roughly $ 23,000. In ARK’s latest forecast, EVs hit price parity with comparable gas-powered vehicles in 2022, so Tesla’s battery breakthroughs, if true, will accelerate the timeline by one to two years."

Source: ARK Invest

ARK Invest also believes that concerns about the constraints associated with management bandwidth and vehicle painting could diminish significantly as Tesla announces its plans for capacity per factory and for ‘cyber’ electric vehicles. Instead of building factories in different locations, Tesla is likely to expand the footprints of existing factories, eliminating the painting-related bottlenecks with a shift in production to ‘cyber’ vehicles.

Vehicle painting leads to two bottlenecks - production and emissions. Tesla’s stainless steel ‘cyber’ EV will obviate the need for paint, making it an ideal candidate to proliferate on an autonomous ridesharing platform.

Therefore, according to ARK Invest, in reality the question sounds differently: “How big will each of Tesla’s factories be?”

Featured image: Evannex




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