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Tesla gave Morgan Stanley a tour of its CA factory, and expansion sounds like a no-brainer
Morgan Stanley analysts Adam Jonas detailed a recent tour of Tesla’s Fremont Factory in Northern California, which included test drives of the Model 3, Y, and S Plaid. Based on Jonas’ synopsis of the plant, an expansion of the California plant may be just what the company needs, especially as CEO Elon Musk hinted that building onto the factory may be in the cards for Tesla soon, and it sounds like the most logical solution.
Jonas published a lengthy note to investors on Wednesday, indicating the five main takeaways from Morgan Stanley’s plant dealt with a busy work environment, strong margins, supply chain bottlenecks with raw materials, and Full Self-Driving’s take rate with customers.
However, one of the biggest takeaways from the note was Jonas’ number one point: The Tesla Fremont plant is ‘bustling’ to say the least. Jonas says the plant is operating at a rate of 50 percent above its intended capacity. When Toyota operated the plant prior to Tesla’s takeover, the factory produced 300,000 units per year. However, Tesla is building all four vehicle models at the factory currently. Builds from Fremont remain in North America, unless it is a Model S or Model X vehicle, as this is the only plant that produces Tesla’s flagship models. In Europe, the Model 3 and Model Y are currently produced at Gigafactory Shanghai. However, Gigafactory Berlin is set to begin operation in less than a week, which will provide European customers with Model Y builds initially.
Fremont is operating at a tremendously over-worked rate, which is complicating supply chain management and production at the facility, the note said. “The plant was never designed to produce 450k units (at its peak produced ~300k units before Tesla took it over from Toyota) which was immediately apparent at the tour, ” Jonas wrote. “Tesla does not shy away from the fact the plant is inefficiently designed with 4 assembly buildings, one of which is a tent that cars are assembled in,” in reference to GA 4.5, a sprung structure that Tesla filed to make permanent in 2021.
Additionally, Jonas said that, while the plant has an “exciting buzz,” Fremont is simply running out of space. This “was notable and provides little space for trucks to drop off supplies in locations that make sense inside the plant.”
Combining all of the points Jonas brings up in his note fully supports a recent idea from Musk, who indicated in March Tesla was considering an expansion of the Fremont factory, which is the only operational automotive assembly plant remaining in California. Ford had several in the 1900s, but each has closed.
Tesla is considering a significant expansion of its Fremont Factory
“Actually, we still operate our California factory, which is the largest auto plant in North America, at full capacity and are considering expanding it significantly,” Musk said on March 2. “It has built 2/3 of all electric vehicles in North America, twice as much as all other carmakers combined.”
While Tesla continues to expand manufacturing by opening new plants, its current factories have an opportunity for expansion. Gigafactory Shanghai, which has been operational since early 2020, has already received plans for its first batch of expanded production lines, according to filings Tesla submitted last year. Fremont is an integral part of Tesla’s operation, contributing nearly 500,000 vehicles annually to Tesla’s global operation. A significant expansion may be what the automaker needs to fulfill increased guidance, supplementing Gigafactory Texas as the plant continues to pump out production units ahead of initial deliveries. Tesla will need some time to get Gigafactory Texas up and running to full capacity, in which case Fremont will continue its exemplary output.
Perhaps Gigafactory Texas can repay the favor in a few years, if Tesla ultimately decides to expand Fremont by a significant margin, as Musk indicated.
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Tesla China January wholesale sales rise 9% year-on-year
Tesla reported January wholesale sales of 69,129 China-made vehicles, as per data released by the China Passenger Car Association.
Tesla China reported January wholesale sales of 69,129 Giga Shanghai-made vehicles, as per data released by the China Passenger Car Association (CPCA). The figure includes both domestic sales and exports from Gigafactory Shanghai.
The total represented a 9.32% increase from January last year but a 28.86% decline from December’s 97,171 units.
China EV market trends
The CPCA estimated that China’s passenger new energy vehicle wholesale volume reached about 900,000 units in January, up 1% year-on-year but down 42% from December. Demand has been pressured by the start-of-year slow season, a 5% additional purchase tax cost, and uncertainty around the transition of vehicle trade-in subsidies, as noted in a report from CNEV Post.
Market leader BYD sold 210,051 NEVs in January, down 30.11% year-on-year and 50.04% month-on-month, as per data released on February 1. Tesla China’s year-over-year growth then is quite interesting, as the company’s vehicles seem to be selling very well despite headwinds in the market.
Tesla China’s strategies
To counter weaker seasonal demand, Tesla China launched a low-interest financing program on January 6, offering up to seven-year terms on select produced vehicles. The move marked the first time an automaker offered financing of that length in the Chinese market.
Several rivals, including Xiaomi, Li Auto, XPeng, and NIO, later introduced similar incentives. Tesla China then further increased promotions on January 26 by reinstating insurance subsidies for the Model 3 sedan. The CPCA is expected to release Tesla’s China retail sales and export breakdown later this month.
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Tesla’s Apple CarPlay ambitions are not dead, they’re still in the works
For what it’s worth, as a Tesla owner, I don’t particularly see the need for CarPlay, as I have found the in-car system that the company has developed to be superior. However, many people are in love with CarPlay simply because, when it’s in a car that is capable, it is really great.
Tesla’s Apple CarPlay ambitions appeared to be dead in the water after a large amount of speculation late last year that the company would add the user interface seemed to cool down after several weeks of reports.
However, it appears that CarPlay might make its way to Tesla vehicles after all, as a recent report seems to indicate that it is still being worked on by software teams for the company.
The real question is whether it is truly needed or if it is just a want by so many owners that Tesla is listening and deciding to proceed with its development.
Back in November, Bloomberg reported that Tesla was in the process of testing Apple CarPlay within its vehicles, which was a major development considering the company had resisted adopting UIs outside of its own for many years.
Nearly one-third of car buyers considered the lack of CarPlay as a deal-breaker when buying their cars, a study from McKinsey & Co. outlined. This could be a driving decision in Tesla’s inability to abandon the development of CarPlay in its vehicles, especially as it lost a major advantage that appealed to consumers last year: the $7,500 EV tax credit.
Tesla owners propose interesting theory about Apple CarPlay and EV tax credit
Although we saw little to no movement on it since the November speculation, Tesla is now reportedly in the process of still developing the user interface. Mark Gurman, a Bloomberg writer with a weekly newsletter, stated that CarPlay is “still in the works” at Tesla and that more concrete information will be available “soon” regarding its development.
While Tesla already has a very capable and widely accepted user interface, CarPlay would still be an advantage, considering many people have used it in their vehicles for years. Just like smartphones, many people get comfortable with an operating system or style and are resistant to using a new one. This could be a big reason for Tesla attempting to get it in their own cars.
Tesla gets updated “Apple CarPlay” hack that can work on new models
For what it’s worth, as a Tesla owner, I don’t particularly see the need for CarPlay, as I have found the in-car system that the company has developed to be superior. However, many people are in love with CarPlay simply because, when it’s in a car that is capable, it is really great.
It holds one distinct advantage over Tesla’s UI in my opinion, and that’s the ability to read and respond to text messages, which is something that is available within a Tesla, but is not as user-friendly.
With that being said, I would still give CarPlay a shot in my Tesla. I didn’t particularly enjoy it in my Bronco Sport, but that was because Ford’s software was a bit laggy with it. If it were as smooth as Tesla’s UI, which I think it would be, it could be a really great addition to the vehicle.
With the launch of a new trim level for the Model Y last night, something almost went unnoticed — the loss of a moniker that Tesla just recently added to a couple of its variants of the all-electric crossover.
Tesla launched the Model Y All-Wheel-Drive last night, competitively priced at $41,990, but void of the luxurious features that are available within the Premium trims.
Upon examination of the car, one thing was missing, and it was noticeable: Tesla dropped the use of the “Standard” moniker to identify its entry-level offerings of the Model Y.
The Standard Model Y vehicles were introduced late last year, primarily to lower the entry price after the U.S. EV tax credit changes were made. Tesla stripped some features like the panoramic glass roof, premium audio, ambient lighting, acoustic-lined glass, and some of the storage.
Last night, it simply switched the configurations away from “Standard” and simply as the Model Y Rear-Wheel-Drive and Model Y All-Wheel-Drive.
There are three plausible reasons for this move, and while it is minor, there must be an answer for why Tesla chose to abandon the name, yet keep the “Premium” in its upper-level offerings.
“Standard” carried a negative connotation in marketing
Words like “Standard” can subtly imply “basic,” “bare-bones,” or “cheap” to consumers, especially when directly contrasted with “Premium” on the configurator or website. Dropping it avoids making the entry-level Model Y feel inferior or low-end, even though it’s designed for affordability.
Tesla likely wanted the base trim to sound neutral and spec-focused (e.g., just “RWD” highlights drivetrain rather than feature level), while “Premium” continues to signal desirable upgrades, encouraging upsells to higher-margin variants.
Simplifying the overall naming structure for less confusion
The initial “Standard vs. Premium” split (plus Performance) created a somewhat clunky hierarchy, especially as Tesla added more variants like Standard Long Range in some markets or the new AWD base.
Removing “Standard” streamlines things to a more straightforward progression (RWD → AWD → Premium RWD/AWD → Performance), making the lineup easier to understand at a glance. This aligns with Tesla’s history of iterative naming tweaks to reduce buyer hesitation.
Elevating brand perception and protecting perceived value
Keeping “Premium” reinforces that the bulk of the Model Y lineup (especially the popular Long Range models) remains a premium product with desirable features like better noise insulation, upgraded interiors, and tech.
Eliminating “Standard” prevents any dilution of the Tesla brand’s upscale image—particularly important in a competitive EV market—while the entry-level variants can quietly exist as accessible “RWD/AWD” options without drawing attention to them being decontented versions.
You can check out the differences between the “Standard” and “Premium” Model Y vehicles below:
@teslarati There are some BIG differences between the Tesla Model Y Standard and Tesla Model Y Premium #tesla #teslamodely ♬ Sia – Xeptemper
Tesla China January wholesale sales rise 9% year-on-year
Tesla’s Apple CarPlay ambitions are not dead, they’re still in the works
