Reuters reports that Tesla highly improved the efficiency of Model S and Model X production at the Fremont factory.

Tesla Model S Productio

Tesla Model S Productio

The main gains are in decreasing the number of labor hours needed at the assembly line.

"Tesla Inc said the number of labor hours needed to produce its Model S and Model X cars have decreased considerably, following the latest report of quality problems that could prevent the carmaker from hitting its production targets."

"Tesla was responding to a CNBC report that said the company was churning out a high ratio of flawed parts leading to costly rework and production delays, citing several current and former employees."

It's now possible to achieve a production rate of 100,000 Model S and Model X annually using just a two-shift cycle with minimal overtime. Previously, Tesla needed three-shifts.

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If this report is accurate, then we expect it to result in higher margins on the S and X.

Source: Reuters