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Green Hype Doubt: Suppliers Question Tesla’s Goals For Model 3 Output


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.

Details on Model 3 production projections have not been reported previously, and Tesla did not break out target volumes for the Model 3.

Tesla has taken 373,000 orders for the Model 3 – which has a starting price of $35,000 (24,036 pounds), 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. […]

Tesla says the Model 3 features 6,000 to 7,000 unique components, fewer than the typical automobile with a combustion engine and the Model S, which has more than 8,000 parts.

The company still is soliciting bids for parts and machinery, according to representatives from several of companies that have received them, as well as industry consultants who monitor such bids.

Automaking consultant Ron Harbour of Oliver Wyman said increasing production at the Fremont plant to 500,000 vehicles in 2018 would require more stamping, welding and assembly machinery that “could take up to 18 months to order and install.”

He said Musk’s plan to make parts in-house can minimize risk, but it also can be more expensive and distracting.

Tesla’s production push comes at a time of high demand for machinery and tooling created by a surge in product launches coming from established automakers, said a Detroit-based supplier sales executive.

Jeff Schuster of industry forecaster LMC Automotive said the goals were “implausible,” in part because Tesla’s battery factory in Reno, Nevada, was unfinished.

Aluminium, lithium and other materials – already in short supply – “could be another limiting factor,” said Sam Fiorani of AutoForecast Solutions.

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