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Tesla Giga Texas is a clean slate for launching its next-gen manufacturing processes
Tesla’s new Giga Texas facility will the second United States-based location for the all-electric automaker to manufacture its vehicles. With its first being located in Fremont, California, which has been in operation for Tesla since 2010, it may be planning to use its new Texas plant as a “clean slate” for manufacturing testing. With a widespread focus of the company being primarily set on making its vehicles faster, in larger amounts, and with better quality than ever before, a fresh spread of production lines in a new plant that is close to home is ideal for CEO Elon Musk, who announced the Texas plant during the Q2 2020 Earnings Call.
But apart from the new plant, the Q2 2020 Earnings Call included another big piece of information that was repeatedly discussed: manufacturing efficiency. With engineers who can help Tesla solve the manufacturing puzzle in high demand, the automaker can begin to set its sights on reaching a more sizable annual production and delivery rate.
However, it starts with the right personnel, and Tesla is surely searching for some highly-capable individuals who can help introduce new techniques and processes to the supply chain.
Tesla has been seeking individuals to help revolutionize its manufacturing processes. It starts with Giga Texas.
Manufacturing is where Tesla begins its process of delivering a car to a customer. After rounding up all of the material and necessary parts and people, a car can be built on production lines. However, there is always room for improvement, and as demand continues to grow in the face of an ever-changing automotive industry, Tesla needs to adapt. Without a doubt, the company recognizes that the key to keeping up with demand is building vehicles faster than ever before.
Musk, for one, is all-too-familiar with the struggles of building cars. When the Model 3’s introduction of “production hell” brought Tesla to a crossroads in 2017, it was evident that things needed to be solved. More lines and more personnel were brought in, but there is a better strategy than just adding more volume. There is a chance to revolutionize the way cars are built, making the entire process easier, more refined, and better for the company as a whole.
Sheer magnitude of the entire production system is hard to appreciate. Almost every element of production is >75% automated. Only wire harnesses & general assembly, which are <10% of production costs, are primarily manual.
— Elon Musk (@elonmusk) October 12, 2020
For Tesla, manufacturing half-a-million units of the same two cars every year is far from monotonous and repetitive. It is an opportunity to learn.
“…They sort of put manufacturing is like, oh, this is for some boring, just making copies, whatever. But actually, there’s far more opportunity for innovation in manufacturing than in the products itself, order magnitude,” Musk said during the company’s second-quarter Earnings Call. “If you work on manufacturing engineering, but you don’t just get force-fed a sandwich. You get to change the product design. So it’s super exciting.”
A focus on manufacturing has put Tesla at the forefront of automotive technology and design. Musk has even said himself that the company’s long-term sustainable advantage would be manufacturing. Eventually, other automakers will create and build a line of sustainable, functional, and operational EVs. However, Tesla will be able to put themselves ahead of the pack simply because the company’s manufacturing efficiency will be “head and shoulders” above everyone else.
Tesla will be absolutely head and shoulders above anyone else in manufacturing. That is our goal.” -Elon Musk
“Eventually, every car company will have long-range electric cars. Eventually, every company will have autonomy. But not every company will be great at manufacturing. Tesla will be absolutely head and shoulders above anyone else in manufacturing. That is our goal,” Musk said.
The problem is that testing these new techniques and ideas becomes difficult when you have two functional production plants and two others that are being constructed. Without a doubt, trying new things in terms of manufacturing could be detrimental to current lines and could interrupt the much-needed production efforts that are going on currently. So the only way to really test it is to build a new facility and try things on lines that have yet to be used.
This is where Tesla’s advantage lies with Giga Texas. It becomes the perfect place to test new techniques as lines have yet to be built, and none of the company’s current infrastructure is dependent on Giga Texas’ output. Not only is it a fresh start, but it is also close to home, and Musk will have the opportunity to oversee new production and manufacturing methods by simply hopping on his private jet and darting off to the Lone Star State.
Elon Musk giving YouTube tech reviewer Marques Brownlee a tour of the Fremont factory. (Credit: MKBHD/YouTube)
Tesla is currently looking for proven manufacturing leaders to take charge of the Giga Texas plant as well. This job won’t be business as usual or the same monotonous challenges day in and day out. Tesla is looking for a change, and it is dead set on coming up with new ways to make cars efficiently. As the company nears a 1 million vehicle a year production rate, Giga Texas may be the way Tesla sets itself apart from all other car companies by showing new and innovative techniques that could drive the company’s manufacturing practices to become more efficient and groundbreaking for the future.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
Tesla stock closes at all-time high on heels of Robotaxi progress
Tesla needs to come through on this one Robotaxi metric, analyst says
