Tesla Orders $415 Million Worth of New Equipment to Push Model S Production to ~ 56,500 Units in 2014


Tesla Motors is expected to complete an order for $415 million worth of new equipment to more than double production capacity at its sole US manufacturing site in Fremont, California.

Tesla to More Than Double Production Capacity With Order of New Equipment

Tesla to More Than Double Production Capacity With Order of New Equipment

Once installed, annual production capacity could jump from the 21,500 Model S sedans expected to be built in 2013 to 56,500 units in 2014.

If the SF Gate report holds true, then Tesla Model S production will actually exceed Tesla’s own target announced in the past of 40,000 units in 2014.

Some of the equipment will no doubt be used to make components for the upcoming Mercedes-Benz B-Class Electric Drive, a vehicle that’s powered by Tesla.  So, it’s difficult to say for certain if Tesla now plans on bumping Model S production up to 56,500 units in 2014 or if a decent percentage of the additional production volume will be set aside for making those M-B components.  Remember, the Tesla Model X won’t go on sale until late 2014 (think December or perhaps even early 2015), so the electric SUV doesn’t really factor into the production increase mentioned here.

*Of note: Mercedes-Benz B-Class Electric Drive sales won’t start in the US until Summer 2014.  The vehicle won’t be sold nationwide until 2015.  So, it would seem that most of the added production capacity in Fremont will be for the Model S

As expected, Tesla will receive a tax break on the purchase of the new equipment, as do most all clean-tech companies in California. The tax break for Tesla is expected to be $34.7 million.

Source: SF Gate

Category: Mercedes, Tesla

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28 responses to "Tesla Orders $415 Million Worth of New Equipment to Push Model S Production to ~ 56,500 Units in 2014"
  1. David Murray says:

    without knowing what the equipment is, it could very well related to Model X.

    1. kdawg says:

      My company bid on some of this. The part we bid on was some automation, robots, conveyors, etc. However due to our workload, I think engineering pretty much shot the idea down. Too bad, would have been fun. And maybe I would have got some field work at the Tesla plant in sunny CA for a few weeks.

      1. ModernMarvelFan says:

        CA is only sunny in some locations…

        Some part of the CA are always foggy or smoggy….

  2. pjwood says:

    ~50k is roughly the number that almost fully exploits the Panasonic 18650 cell capacity, so this great news sort of makes sense. Still, these unit volumes, in this price bracket, must leave many jaws on the floor.

    1. Anderlan says:

      “We are not demand-constrained at this point in time.” 🙂 🙂 🙂

      1. Ocean Railroader says:

        If they did get it up to 56,000 Cars that is quite realistic in that that would put them at a over a 1000 cars a week. As of now they are at 600 but if Panasonic opens up ether one or two more factory building lines like they are talking about opening up by February or March it’s quite realistic that they could get up to a 1000 a week. In that in order to reach 40,000 for next year they would have to be building a minimum of 800 cars a week and as of now they are at 600. So what could happen is by February when the new flood of batteries comes in they raise production to 800 by the start of March and by June or July go up to a 1000 cars a week.

        If they do reach production numbers this high it could have effects on global oil markets considering the model S knocks out the need for oil for gas all together. But I think the super charging stations are going to need to under go some type of massive expansion to handle 20 to 30 and maybe even in some cases 40 cars charging at once.

        1. David Murray says:

          I seriously doubt Tesla alone would have any affect on the oil market even if they were producing several thousand per week (and selling them). It just isn’t a big enough percentage of the overall car market.

          1. Ocean Railroader says:

            I was reading a book called Twilight in the Desert along with several others as part of me being a oil price spike doomsday prepper. What is odd about oil demand is that it is very sensitive to even small rises and falls in oil demand and production that can have a big effect on price. Such as if you have 100,000 to 300,000 electric cars offset 50,000 to 90,000 barrels of oil a year that in turn reflects across the whole global oil supply chain in that now they can send that oil somewhere else or stock it in oil fields or in most cases cut back on pumping.

            Here is a example http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-404104/ In this Saudi Arabia has cut oil production from 10 million barrels a day to 9.6 which means the global oil supply has now shrunk by 400,000 barrels.OPEC has officially said they will do everything in their power to keep oil at a $100 dollars a barrel even if they have to cut production back a great deal.

            In the example of replacing 400,000 barrels of oil Tesla could easily do it once they reach their factory’s full capacity or if they have had two or three years of making 50,000 to 70,000 cars.

            1. joel says:

              Bottom line is OIL is a finite resource.
              It has been sitting in the ground for millions of years.
              It will be very valuable at some point in time.

              Did you know the interiors of the Tesla is made out of petro chemicals??? Not algae.

              And along the way, big oil will be buying up companies and patents to control battery technology.

              anyone think big oil is ONLY into oil???

              C U in 10 years!!!

            2. Mark says:

              well documented. thanks

        2. Bonaire says:

          Here’s what they should do. We all want cost of scale. The early adopters ponied up but….. Tesla should drop the price of the Model S in 2015 by 5-8 K. This is step one to assist further export while the USD is not all that strong against the UK pound and other currencies. This gets them more sales. And, if margin is still large as it is now, then sales equals possible profit.

          The Model X is larger, AWD and with that should cost more than a Model S. Bring out the X at the same price as the S while taking the price of the MS down by that 5-8K.

          If the goal is more sustainable transportation, lowering the price is one way to get there. Leaf and Volt have been lowered 6k and 5k respectfully.

        3. Macpacheco says:

          The cumulative effect in a few years could start having a small impact.
          Specially if production keeps rising in the ballpark of 50% / year (right now it’s close to doubling every year).
          When Tesla has one million cars total in the streets, that’s a big round number that could begin to have measurable impact the oil markets.
          At 250k teslas there might be a big splashy psycological impact.
          The bottom line is we need one million electric cars / year worldwide to really make a measurable difference.
          The very interesting information about Tesla is the Model S seems to sell itself. The number of orders placed by neighborly test driving is very strong.
          That’s the fantastic impact of a car revolutionary and sexy that is love at first sight on mass.

    2. Jouni Valkonen says:

      It is faster to increase battery production capacity than car manufacturing capacity. So Tesla should be able to inform Panasonic in time if their battery demand is increased. It takes just few months to ramp up battery production capacity.

  3. Ocean Railroader says:

    What is funny is there is a 1990’s Captain Planet episode that takes place at a new car factory that in the episode produces super fuel efferent cars called Good Air Sudan cars. And the main eco villiains Hoggish Greedy views it as a danger to his bottom line so he takes over the factory and kidnaps the main CEO and uses it to produce the gas guzzling road hog. What makes this episode quite shock compared to Tesla is that the good Air Sudan Car has gull wing doors like the Tesla E model. Also there is a funny line where Hoggish Greedy says, “People don’t want to buy fuel saving Eco Cars they want big cars with options and horse power and style.” Of course what he forgot was the Tesla model S has all these features expect it’s a eco friendly car that even Captain Planet would be happy about in that it uses no oil and emits no smog and it can be super charged in 20 minutes with solar power.


    This was something I was noticing about Tesla.

    1. Jouni Valkonen says:

      That is good point. People still have hard time to orient that there is no need to make non-performance electric vehicles. Tesla’s 300 kW electric motor is water melon sized. There is very little cost difference between 300 kW electric motor and 30 kW electric motor. It mostly translates to the power capacity of the battery pack and large battery pack with small cell size gives huge power output.

      What is the best thing about electric vehicles that they green-washes personal transportation and EV is an epitome of sustainable abundance! All resources what electric vehicles require is aluminium and silicon which are among the most common elements on Earth’s crust.

      1. Dr. Kenneth Noisewater says:

        Indeed, which is why I’d like to see at least 2 of them in a performance Tesla, one for each wheel (rear or all).

        The Spark EV motor also looks like it can be doubled up fairly straightforwardly, and having a 200kW/800lbft of torque motor at each rear wheel would be pretty kickass, the problem is getting a battery to put out enough of a voltage :p

  4. veselin says:

    What a great news! I wonder what is the next surprise from from Tesla in 2014?????

    -4X4 Model S and 0-60 in 3 sec
    -big price cut
    -120 kw/h battery at the same price as 85kw/h

    1. Jouni Valkonen says:

      4wd Model S with 2 x 300 kW power and 120 kWh battery pack would be quite something. Even if it had a cost of $120k, it would be a car that just crushes ICE cars from the top end premium category.

      1. Bonaire says:

        Crushes how? Acceleration? But, how about in any other way? Some buyers do not buy cars strictly for the acceleration. Perhaps 90% or more drivers. I would be happy with 2 x 140 KW AWD since that would be more than enough for anything except racing.

        1. Jouni Valkonen says:

          Bonaire, you just don’t get it. You can install electronic limiter in your car that limits your 600 kW electric car power to 2 x 140 kW. Downgrading electric car power is very easy.

          1. Bonaire says:

            Yes you can derate power delivery through MOSFETs management through software throttle curves. Also, with a two-motor AWD solution, you can cut power to one motor and drive on the highway with only one motor pushing one axle and that may be one way to also limit power consumption for long range driving of AWD solutions.

            I’m not saying its bad – I’m saying everything doesn’t have to be testosterone-driven. Most sports cars that have the kind of power you mention are not sold in high volume and also cost much more. You really don’t want to have 500 hp low-cost, consumer cars driving around out there on public roads. A lot of them end up in the trees or in multi-car accidents. The cost-factor of high power sports cars keeps many of the kids and irresponsible people out of them.

            2x300KW is very potent especially in electric form. That might be upwards of 800 lb/ft of AWD power. But as you said – at $120K, that may be a good offering for those who must-have-it.

      2. Ocean Railroader says:

        They could also offer the 120 kwh battery back in the Model S for the same as the 85 kilowatt battery or they could charge it as a free option on the premium model S.

  5. SeattleTeslaGuy says:

    Huge GM invests $121M in EV production, Little Tesla invests $415M in EV production. I think we can all see where this story is going…

  6. Bret says:

    So, today I see this financial analyst on MSNBC and he is bagging on Tesla’s stock because, “They have worked down their backlog and sales should start to decline”.

    Either this analyst or Elon Musk is seriously delusional. My money is on Tesla.

  7. Nix says:

    “*Of note: Mercedes-Benz B-Class Electric Drive sales won’t start in the US until Summer 2014. The vehicle won’t be sold nationwide until 2015. So, it would seem that most of the added production capacity in Fremont will be for the Model S.”

    There isn’t that much a contradiction between those dates and this factory upgrade. Mercedes would need those battery packs and drivetrain built and delivered in time to build up enough cars before they launched in Summer 2014.

    I don’t know where Merc will be building these cars, but I’m guessing Tesla will have to ship them somewhere. The most cost efficient way to ship is via shipping container, so Tesla has to start building ahead of a projected date it would take to fill a shipping container. That pushes back the start date of manufacture. Merc needs those containers delivered with enough time to build out cars before they are shipped to the launch markets, and needs time to build up enough units to do a real launch. That pushes back that start time. Etc.

    I wouldn’t be surprised if Tesla were starting to build those battery packs and motors starting even before they got all this newly ordered equipment installed in their factory.

  8. Tooomp says:

    GM just announced costs reduction investments for the Volt….this comes on top of a recent price drop….and will likely result in a further price reduction…..with Volt and Model S in the one and two spot….their combined production will be near 100,000 in 2014….and a total U.S. EV market around 160,000-200,000….seems like the market has reached a critical point with regards to battery prodctuion; whereby, producers can depend on demand for their product, enabling greater investments for production and cost reducing measures…in two years we will see a big shift in the market…one thing still holds everything back and that is charging stations….more public charging is needed and consumers could use some kind of break or incentive to clean their garages….ha..ha…

    1. David Murray says:

      But when that point is reached, the federal tax incentives disappear and there will be a sudden drop in purchases.

      1. Jeff D says:

        I don’t see purchases dropping all that much if so much has already been invested in EVs that prices will be reasonable even without the tax incentives. I see that as a positive sign that we can foresee a time when the EV industry will be able to stand on its own without government intervention.