Tesla to Begin Gearing Up For Model X Production – Demand Expected to Exceed Model S


For Tesla Motors, its biggest hurdle to overcome in 2014 will be in readying its Fremont factory for production of the Model X.

Model X

Model X

As part of the gear up for Model X production, Tesla will have to outlay a significant amount of money.  As Tesla sees it, spending will increase “significantly” this year as production speeds up and the automaker readies for the Model X launch.

Tesla CEO Elon Musk says this of Model X assembly/production:

“We do need a new final assembly line, which we hope to transfer to in the third quarter or thereabouts.  Also there’s a new [body-in-white] assembly facility … where the Model X is built.”

“The car business is truly staggeringly big—$2 trillion in new-car sales.  It’s a pretty big ramp ahead in terms of reinvestment.”

Tesla has the necessary funds on hand, even before their recent successful $2 billion dollar convertible bond offering, but spending loads of cash will most likely result in higher net losses this year.

Model X

Model X

If Tesla pulls it off (gets the Model X out on time and ramps production up at a reasonable pace), then the reward could be significant.

Tesla says that the Model X is selling itself already, despite the automaker not yet marketing it.  Musk says there’s strong demand for the Model X, but he declined to provide an exact figure for pre-orders (reservations). However, Musk believes that Model X demand will exceed demand for the Model S.  We suspect that Musk is accurate in this regard, at least as it applies here in the US where SUVs/crossovers are the preferred mode of transport.

Quoting Musk in regards to Model X demand:

“The fish are jumping in the boat. We’re actually not trying to sell the Model X at all, and we’re seeing a steady accumulation of deposits.”

For Tesla, the simultaneous production of 2 vehicles will be something the automaker has zero experience with.  Our hope is that Tesla Motors succeeds in adding a second model to its lineup.

Source: Automotive News

Category: Tesla

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36 responses to "Tesla to Begin Gearing Up For Model X Production – Demand Expected to Exceed Model S"
  1. Bill Howland says:

    “The fish are jumping into the Boat”. I’ve said it before, but its nice that Musk has such a high regard for his customers. As an early ‘fish’ with the roadster, I hope I don’t end up like most caught fish.

    1. gigglehertz says:

      It’s just an analogy, don’t be so cynical. I’m sorry roadster owners had so many problems, but in fairness it was their first try. They’ve come a LONG way since then.

      1. James says:

        And whiners like Old Bill there don’t admit that their Roadster has
        a very good chance of being a collectible on the lines of a Cobra.

        Hang on to that puppy for a couple decades and it could pay your
        retirement at Barrett-Jackson!

        I’d buy Bill’s Roadster off of him if I win the Powerball. As it is, I
        drool at each and every one that appears as a used one on the
        TeslaMotors website.

        Gee, Bill – I’ll cry ya a river! 🙂

        1. Bill Howland says:

          How old are you? And how many EV’s do you own? I like the 2 I have and might buy another. I kinda figure having 2 of them gives me the right to comment on them, no?

        2. Bill Howland says:

          You guys apparently can’t make an intelligent comment on any of my technical posts, but when I wax philosophic there’s no shortage of cackling.

    2. EV says:

      do you really get butt hurt that easy?

  2. Warren says:

    Meanwhile, those of us who thought that the poor energy density of batteries would finally drive the introduction of efficient cars will have to wait another century…or build our own.

    1. Anon says:

      Model X is still more efficient than any other CUV on the planet. If you’re waiting for extreme lightweighting, prod Edison2’s VLC. Haven’t heard a peep from them in months. 🙁

  3. TomArt says:

    Well, many of the employees do have such experience, since several came from Ford, GM, VW, Toyota, etc. I’m sure it’s not easy, but I expect them to pull it off without any major problems.

    1. koz says:

      Yup and it should be easier than designing, engineering, developing, and manufacturer their first car and platform. This is a veritable walk in the park in comparison.

  4. MTN Ranger says:

    Maybe it’s me but something about the Model X looks awkward. Instead of attaching a pump and making a bulbous Model S, I wished they used a new design.

    1. qwerty says:

      Me too.

      1. kdawg says:

        I think the Model X looks better than most SUVs, more-so than the Model S looks compared to other sedans. (I just hope the Gen3 doesn’t look like either.. well the nose anyway)

    2. Anon says:

      Ever seen the Mini Cooper CUV, or the Fiat 500L? Same thing, inflated previous design for larger vehicle to conform to market branding. Everyone does it.

      1. James says:

        The rub as to how well and widely it’s received will come from folks
        who are attracted to impractical SUVs and CUVs because of a perceived
        tougher look. Range Rovers and Grand Cherokees are like Afrikan 4X4
        Jeeps that have had some of their square edges rounded. Look at the
        uproar to the new Cherokee with it’s more aero front. Jeep lovers act as
        if a Communist just got into the White House! I think they’ll picket
        Chrysler headquarters!

        That said, there is a new wind blowing and there is also the “Prius Effect”
        to consider. Range Rover sells to that ( Model X ) demographic, and
        plies on it’s uber leather and fine woodgrain. A few of those people will
        go on with the Gelandewagen mentality, meaning – buying an old tired
        design that is much more iconic and symbolic than functional. The
        younger upscale SUV/CUV crowd is easier swayed by new design though,
        as proved by the Evoque. Range Rover cannot keep them on the shelf,
        yet underneath it’s nothing new. The Prius effect is what I call the
        circumstance that happened when people used to buying cars with
        a face ( grille ) started buying Prii because they understood the form
        followed it’s function. Their desire to save on gas or breathe clean air
        ( or stop global warming… ) trumped their need for a big square nose
        and traditional design. Not to say smarter people bought into Prius
        because of it’s intrinsic qualities and gas mileage, and put looks aside
        to a greater extent, but that’s basically what happened. I particularly
        thought hatchbacks with sloped noses looked sporty. But I am in
        the vast majority in the USA.

        Model X will be controversial to those traditionalists who want a CUV
        to look Jeeplike. I can agree with you that I would’ve added more
        surface interest ( aka: adding some interest lines to the roof and
        sides ) to set it slightly apart from the S, but we may well be surprised
        at the well-off crowd who wants eco cred and the image a Tesla
        projects. Perhaps, like Prius, there’s more smart people than we
        perceive – folks who understand a smooth design that flows through
        the air equals longer range and a better CUV.

        1. James says:

          EDIT – Make that, …”But I am in the vast MINORITY in the USA”..woops!

          Yes – Americans love them some big square-assed, tall wind-blocking
          grilles and boxy shapes.

          Full-sized trucks get squarer and taller and higher each model cycle,
          and so do their truck-based SUV brothers and sisters. John Q
          American believes putting grille shutters on a pig is actually a
          great idea to increase MPG.

        2. Eletruk says:

          It’s one of the reasons I loved the Nissan Murano when it came out, it didn’t look square and boxy like the usual SUV, and they outright admitted it wasn’t going off-road. Hell most SUVs don’t even go as off-road as a gravel road.

    3. Stuart22 says:

      Bingo. You beat me to it – the X indeed looks like a bloated Model S. I wish they would have made the roofline more wagon-like instead of sloping it down in the tail end. Better for utility and better for making it more distinct from the Model S.

    4. Bill Howland says:

      The Model X looks to me as a logical progression from the S, in other words, how do you do the conversion with the smallest number of changes possible. Mtn Ranger what did you mean by adding a pump?

      The one question I would have is what is taking them so long and why did they plan on a 2wd version, but later change their minds?

  5. qwerty says:

    I personally believe the X won’t sell as well as the S.

    Also, I heard when the Gigafactory is built. Tesla *Might* vacate the Fremont NUMI plant.

    1. Renė says:

      “I heard”. Can you provide any sources?

      I’m asking since it doesn’t seem to make much sense, if you more than enough capacity to cover your need for quite sometime, an already working assembly line, with logistics, employees, etc. Not to mention they got it quite cheap!

    2. arne-nl says:

      There’s a reason for Tesla to set up shop in The Valley.

    3. vperl says:

      You lost

  6. ffbj says:

    Really? 3/4 of the plant is empty. It has the capacity to produce 500,000 cars a years. Why would they vacate it? It is just empty space that you put car production lines in. so you are saying they will move their production facilities to the gigaplant once built? Doubtful.

  7. Anton Wahlman says:

    The $2 billion is earmarked for the battery joint venture, not for any X or E development.

    This is the text from what Tesla filed with the SEC 2 days ago:

    “We expect to have Model X prototypes with production design on the road by the end of 2014 and begin volume deliveries to customers in the spring of 2015. Any significant delay in the design, manufacture and launch of Model X could materially damage our brand, business, prospects, financial condition and operating results. Automobile manufacturers often experience delays in the design, manufacture and commercial release of new vehicle models. We experienced significant delays in launching the Tesla Roadster, which resulted in additional costs and adverse publicity for our business. In 2012, we also experienced delays in the ramp of Model S. We may experience further delays in launching Model X which may result in cost overruns and adverse publicity. We are in the design and development stages of Model X. Furthermore, we have not yet evaluated, qualified or selected all of our suppliers for the planned production of Model X. We may not be able to engage suppliers for the components in a timely manner, at an acceptable price or in the necessary quantities. We will also need to do extensive testing to ensure that Model X is in compliance with applicable NHTSA safety regulations and obtain EPA and CARB certification to emission regulations prior to beginning volume production and delivery of the vehicles. In addition, we have limited resources and, to the extent that such engineering and manufacturing resources are devoted to Model S or are otherwise engaged such as in development services activities, we may have difficulty designing and delivering Model X in a timely manner. If we are not able to manufacture and deliver Model X in a timely manner and consistent with our production timeline, budget and cost projections, our business, prospects, operating results and financial condition will be negatively impacted and our ability to grow our business will be harmed.

    …Further, we have only produced an early prototype of the Model X crossover…”

    1. Jay Cole says:

      Hey Anton, thanks for the comment and info on the Model X disclosures from their 8k quarterly, but saying that the money is earmarked for the Gigafactory and not the Model E/X/S or other uses isn’t accurate.

      When it comes to the $2 billion offering it is for more than just the giga factory, its worded to specifically include the factory, the 3rd gen model E, acceleration of plans and basically anything else they want to use it for. There is no way they would raise this money then specifically handcuff themselves.

      The $2 billion factory, while it matches the newly revised higher amount (up from 1.6 billion) is not a specific R&D allocation investment…that is Tesla estimates for the project from planned through maximum capacity production in 2020, so that $2 billion will be doled out over the next 7 years
      Here are the quotes and source SEC links of relevance:

      SEC linkhttp://www.sec.gov/…/000119312514069704/d685452dex991.htm

      “Tesla intends to use the net proceeds from the offering to accelerate the growth of its business in the U.S. and internationally, for the development and production of its “Gen III” mass market vehicle, the development of the Tesla Gigafactory and other general corporate purposes. ”
      Tesla’s online statement can be found here:
      And their detailed prospectus as filed: SEC 424B5 Prospectus:

      Under USE OF PROCEEDS—-“We intend to use the remaining net proceeds to accelerate the growth of our business in the U.S. and internationally, for the development and production of the “Gen III” mass market vehicle, the development of the Tesla Gigafactory and other general corporate purposes.”

      1. Anton Wahlman says:

        Yeah, I thought it was for the battery factory, because that was the impression that was given, but it’s not, apparently, as you correctly point out. Either way, that wasn’t the main point I was trying to make. The main point is that they seem to be developing the X on record time, seemingly unprecedented in car history. They say they only have one prototype, but will begin consumer deliveries in one year from now.

        1. Jay Cole says:

          Yupper, completely agree on all point Anton. They are working really fast…even faster on both projects probably now as they don’t have to worry about those pesky financial restrictions, (=

          1. Mikael says:

            It’s so brilliant… suddenly they have a few hundred millions to spend and can put it where it’s needed to grow faster, better and stronger. It even makes it a lot easier to get the return on investment for anyone investing in the battery factory.

            1. Bonaire says:

              They will need some capital to pay off any of the bonds floated last year in May as they are now convertible in Q2 of this year. Remember, the 161.88 20/30 days price rule is still in effect.

  8. koz says:

    Hey Statik,

    I was a little critical of Tesla for paying back their loan early instead of using raised capital from previous issues to accelerate development. I understand the political and perhaps philosophical reasons for doing it but thought the benefits of carrying the loan full were more important. Do you know how the cost of that capital compares to the cost if this new issue?

  9. Bonaire says:

    Seems strange. Teslamotorclub does a good job of tracking reservations. The MX has far less reservations now a year before production (sliding window) than the MS had before its production. Yet some are indicating MX demand will be higher? Based on actual reservation numbers, this seems inaccurate. Statements based on fish seem more accurate than discussion of actual reservation rates.

  10. Gasless says:

    If Tesla figures out how to make the X a fully functional SUV that can carry a cargo box, skis and stuff like kayaks on top, then it will surely be successful. With the full expansion of the supercharging network, we’d finally have a guilt free way to get around and have lots of fun! unfortunately, I see no indication that Tesla is taking the current limitation of the falcon doors seriously. bottom line, if you can’t put anything on top of it, it’s not an SUV, period, it’s a minivan at best, all be it and beautiful minivan.

    1. Bonaire says:

      Easy fix. One falcon door with half, articulating rack. The falcon doors are quite foolish in general. Not an international need, just a fancy feature which has the obvious drawbacks of poor roof space management.

  11. Michael says:

    I like the design. In Germany all houswives drive SUV! Perhaps than we will also see more Tesla here in Germany…i hope!

  12. Giza says:

    Gotta wonder what it will weigh