Investor's Corner

Tesla to Produce 500k Vehicles in 2018, 2 Years Ahead of Schedule

By Gene

Posted on May 4, 2016

Tesla has just released its first quarter financial results and the results are astonishing. The company has upped its 500,000 vehicle build out plan by two years, from 2020 to 2018, and will be adjusting plans at the Gigafactory in order to accommodate for the new production plan. First battery cells will be produced at the Gigafactory towards the end of the year.

TSLA stock is up by 8% in aftermarket trading.

This change of plan comes after the Model 3 saw huge demand within the first few weeks after the official reveal event. With 400k early reservations placed on Tesla’s upcoming mass market sedan – a vehicle that might become the quickest Tesla in its lineup – the company has refocused its efforts on ensuring a timely delivery, and satisfying its soon to be core customer base.

Wired UK Tesla Factory Tour [Source: Wired UK]

The new production goal set by Tesla represents a five fold increase over existing production which will undoubtedly require additional investments. The company indicates in its shareholder letter that “some additional capital” will likely be needed to support this new “challenging” goal.

We’ve highlighted the main points from today’s Tesla Q1 Shareholder Letter here.

According to the Tesla Q1 Shareholder Letter:

“We are on track to achieve volume Model 3 production and deliveries in late 2017. Of course, in order to meet that timeframe, we will be holding both ourselves and our suppliers accountable to be ready for volume production in advance of that timing. Additionally, given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned. Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it. We remain on plan to make the first cells at the Gigafactory in Q4 2016, and we are adjusting our plans there to accommodate our revised build plan. Our objective with Model 3 is to create the world’s best car with a base price of $35,000, before any incentives, with a range of at least 215 miles on a single charge, and with strong gross margins. We plan to incorporate our best technology into Model 3, yet keep it relatively simple to build at high volume and with high quality.”