Musk Says Tesla Vehicle Production Is Typically Battery Cell Constrained

NOV 20 2018 BY VANJA KLJAIC 41

Unsurprisingly, batteries are the culprit holding back large volume expansion by the carmaker.

While plenty are ready to bash Tesla on short notice, with such a novelty product, it’s not that simple to make all things work. At once. After all, the initial product market introduction and high volume production are two completely different things. And judging by the recent developments in both production and delivery systems, the California based carmaker is making strides in impacting both business area. However, one thing that Tesla cannot impact completely is battery production. And that’s been cited by Elon Musk, the Tesla CEO, as the biggest culprit to their production volume expansion efforts.

For Tesla, the development and production priorities are simple: production numbers, deliveries, followed by the Model Y, solar roof tiles, Tesla pickup, Tesla semi, and Roadster. And every item (sans the roof tiles) will need more batteries. With the Gigafactory 2 gearing up to full capacity and the Nevada facility operating at near full capacity, working on new and improved power cells, it seems all their efforts are directed in allowing them to produce both cars and batteries quicker, but also cheaper, allowing the higher margins to be inputted back to R&D programs.

For many, Tesla is a thorn in their heels. And this is becoming especially evident with less and less catastrophic predictions becoming true. However, the company still has a long way ahead of itself and batteries are still going to be their biggest hindering factor for years to come. But overall, we must say that for the most part, Elon Musk is proving everyone wrong. And there’s nothing wrong about that. With bigger and bigger production and delivery goals set, it will be interesting to see how the Lithium and battery industries adjust. Especially with so many of the newcomers and legacy carmakers getting into the EV game with big plans and big dreams.

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41 Comments on "Musk Says Tesla Vehicle Production Is Typically Battery Cell Constrained"

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Pickup ahead of Semi and Roadster?
Sounds logical but the latter two were revealed quite a while ago but nothing concrete on pickup.

The solar panels should be completely indepedent of vehicles – different materials, different factory, etc

Do Not Read Between The Lines

Listed as a priority because of how they’d get volume and revenue, I think.

More resources are going to it. Doesn’t mean it’ll enter production earlier.

Consider that the Model S, X, and 3 also weren’t mentioned in that tweet. Just means they’re no longer at a phase where producing them is consuming a lot of resources.

Model3 Owned- Niro EV TBD -Past-500e and Spark EV,

Solar arrays – want to have the Powerwall backup too = backlog of installations. PW2 uses the same cells as the Model 3. That line has been starving with the rampup. Now with the batterpack lines installed, the new constraint is the cells themselves again, hence the mid-range model offering.

Soon enough, they’ll have capacity and tech to do the SR with new harness wiring to be cost competitive, AND free up battery production for PW2. With the recent announcement of moving all US Tesla battery production to NV, probably means anticipate enough new lines to support X+S too with the new cells.

Musk always pointed to the need for GF1 at volume production in order to make the Model 3 successful. That hasn’t changed.

Legacy companies are stuck with small volume loss-leaders and can’t dig itself out of that hole. R+D is behind on efficiencies (see Audi etron), and costs simply cannot compete 1:1 so subsidies from ICE sales are needed to maintain that switch to electrification. Catch-22 for legacies remain

I would be surprised if Semi is NOT produced in late next year. Tesla needs Semis and this is perfect way to test them, while getting their manufacturing line up. Panasonic is scaling up cell production and will be at 35 GWH/year at end of year (i.e. in about a month). Supposedly, they will continue scaling. If so, then something like the Semis will help since they take 1MWH worth of cells. Between scaling up for M3 and MY, the Semi is IDEAL for taking up slack in cell production.

I think people are confused about the “resources” referenced by Elon in his tweet about priorities. There are different teams that each have different focuses. There’s the product development team, the manufacturing development team and the mass production team (these aren’t official names, just my way of naming them.) The resources that Elon is prioritizing for the truck is the product development team. I think Model Y, Semi and Roadster are pretty much developed as far as products are concerned need only minor tweaks from that team to refine things as the manufacturing development team figures out how/where to build them and gets feedback from real world testing. Thus Elon has moved the bulk of product development focus on to his pet project: the truck.

It’s a theory at least. I think Model Y is ready to be revealed they’re just waiting till the New Year to not steal thunder from Model 3’s banner year.

“I think Model Y, Semi and Roadster are pretty much developed as far as products are concerned need only minor tweaks…”

Yes, that’s my interpretation too. But the Tesla Pickup needs a lot of R&D effort because, I think, that vehicle is still very early in the development process.

I think the MY announcement delay is more than just about M3. MY has already been approved for production.
Basically, it has been designed, and tested (where is a good question). Chances are high that they have mules running elsewhere and have tested MY.

What is kind of far fetched, but possible, is that Tesla has already cut a deal with a state or company and has taken over some factory. IOW, they are busy adding another factory in America to start production on MY.

Compared to the rest of the industry Tesla’s battery position is golden even if it’s never enough to keep up with Elon Musk’s ambitions.

Truly!
His target is a sustainable future where we’re currently over our total released carbon target. Currently there’s an argument that the real Co2 baseline is 170 ppm, not 280 ppm as climate seems to have been changing ever since we started burning the world’s forests. It is argued we’ve never caught up to the built in lag between emissions and full climate response.

Area’s like the great plains in N. America prior to humans was woodlands. We’ve burned a tremendous amount of trees.

Well said!

I thought the time when Tesla was production constrained by battery cell supply was over. From what Elon says here, it’s not. But even so, Tesla is growing far, far faster than any other EV maker; even faster than BYD, which started out as a battery cell maker and still runs its own cell factories.

@Vanja Kljaic: “for many, Tesla is a torn in their heels”

I’m assuming you mean “thorn in their heels?”

or perhaps they’re referring to a torn Achilles tendon? :p

Where did he say anything about battery cells?

I’m still waiting. Did he say anything about the cells? Or did he talk about the battery which likely could be about the battery pack which Tesla has had big problems with during the ramp-up?

He was obviously talking about battery cells. Tesla was supply constrained for years with the Model S due to lack of battery cell supply. In fact, the main reason Tesla built Gigafactory 1 was to greatly expand battery cell supply.

The only time Tesla had any bottleneck in assembling battery packs was the first several months of Model 3 production. That was a major problem, but it has been solved, and is very unlikely to be a production constraint going forward.

If you doubt this is true, then I suggest you read up on Tesla’s history.

When $35k Tesla?

Yes, I find it disappointing that they haven’t prioritized on the base model. Now Elon is focusing 2019 Q1 production on Europe and China, clearly aiming to keep producing high margin upper versions and it looks like the $35k Model 3 is getting pushed off again.

Tesla needs to get to their target production of 10k Model 3 per week to make the base model profitable. This is turning out to be much harder than anyone believed.

Much harder than Elon believed, they are simply waiting for the economies of scale to kick (plus some battery tech advances which seem to have been made) we’ll see it arrive in the US early next year. Hmm how about a Model Y unveil that also announces availability of the base Model 3?

I know it is annoying for customers…but why on Earth would they build the $35K model when they don’t have enough batteries or factory capacity to meet the demand for more profitable models?

If you don’t like it, then consider other less expensive options like the LEAF, Volt, Bolt, etc.

Then why did they say they’d sell the $35k version before AWD, before P, before reaching 5000/week?

My guess is that’s due to Elon formerly being far too optimistic about using automation to greatly increase speed of production, eliminate human workers, and significantly bring down unit costs.

Reality has finally set in. If it was really possible to speed up production (and increase factory throughput) to 5x or 10x current production rates, for something as complex as today’s automobiles, then almost certainly some other company would already have figured out how to do that.

I don’t think we’ll see or hear Elon talking about an “alien dreadnought” factory in the future.

Just what I was thinking. If Tesla remains production constrained, whether that constraint is battery cell supply or anything else, then that’s going to further delay production of the base $35k Model 3. Why should Tesla choose to build a unit of a lower priced car when it can’t even meet the demand for higher priced cars?

oh no! tesla only going to sell and deliver 17k cars this month!
sky is falling!

Panasonic remains totally committed to expanding battery cell production at GigaFactory 1 as required. I am confident this will all work out.

Totally committed? Ummmm… no.

Tesla had to practically drag Panasonic, kicking and screaming, into a commitment to help build Gigafactory 1. Tesla even went to the extent of very publicly courting Samsung as a secondary supplier because they couldn’t — and from what Elon says here, still can’t — get Panasonic to ramp up supply as fast as Tesla wants and needs.

Even after Panasonic belatedly and reluctantly agreed to contribute to the cost of building Gf1, they still dragged their heels by only committing to help pay for the project in stages. (Not that there was anything inherently wrong with that, but the payment structure seems to be set up to allow them to cause repeated delays to Gf1 expansion.)

Furthermore, Panasonic recently complained, publicly, that they haven’t made any overall profit on selling Gf batteries to Tesla, because of the capital investment they’ve been required to expend.

https://insideevs.com/panasonic-gigafactory-1-profit-in-near-future/

they are supposed to be at 35GWH by end of dec. That should be trivial for doing the Model 3 alone. Basically, it would be able to do ~500,000 M3.

where life is interesting is that Panasonic is supposed to bring the production up to 105 GWH. Supposedly by end of next year. And I think that is just at GF1, not including the other plants.

Hopefully, they start the semi. With those taking 1MWH worth of cells, vs, ~70 kwh for the M3, it will enable Tesla the ability to use the Semis to take up the slack for when cell production is outdoing the M3/MY production.

Of course, it will be so forever…

So, offer the $35K with less battery then. What is the excuse now? If base version is
“making a profit”, then when you are battery production capacity constrained, the base version actually makes more sense.

Of course, it is probably true that base versions don’t make any money for Tesla so they can’t offer it yet.

They may make a Standard Range version, but not a $35K version, i.e. the ‘premium package’ and Autopilot options are not optional, but mandatory.

The common Tesla fanboy starting point on the current status of Tesla is ‘THEY ALL PREDICTED CATASTROPHE BUT MUSK PROVED THE HATERS WRONG’ is very tiresome. I understand that this is said in order to underline that Musk is a god and his followers remain faithful.

Fact is that Tesla has had many shortcomings. Big deal! But just give the facts and stop with the over the top drama. I could say, ‘just grow up’.

So, how much money have you lost on short-selling Tesla stock? From the bitterness you display here, I’m guessing it’s quite a bit.

Is Elon Musk a “god”? Nope. But has he accomplished more in a single day that you will in your entire life? Very probably yes!

A god, no. A hero and perhaps the most spectacularly successful visionary of our times, absolutely!

“What really matters is time to volume production, not initial market intro.”

People need to apply this to every other auto maker. No matter how many press releases, concept cars, car unveilings, even fully-ready-to-build car prototypes other auto manufacturers tout…NONE OF THEM HAVE BATTERY MANUFACTURING CAPACITY. Most outsource that and the subcontractors don’t have all that much battery capacity.

We may eventually get some nice non-Tesla EVs on the market but they won’t be able to mass manufacture them because they just don’t have the battery manufacturing capacity.

Model3 Owned- Niro EV TBD -Past-500e and Spark EV,

Unless—-Pana opens up Japan resources now with shifting over cell production to US. That’s the danger there.

By what I understand, Tesla is still buying both all the Gigafactory production AND the Japanese sourced production. It is still nearly impossible to get a Tesla PowerWall. Between the Model S, Model X, Model 3, PowerPacks, and PowerWalls…Tesla just swallows up every battery they can get.

Yeah, the constraint on Tesla’s cell supply shows most starkly in the very limited production of PowerWalls and PowerPacks. In fact, Tesla has gone to other cell suppliers for large PowerPack installations.

First, BYD is the only car makers that produces batteries to the best of my knowledge. Nissan did, but screwed them up.
Tesla has several dedicated lines, but more importantly, they control their future and the future of their batteries. The reason is that Tesla is doing the R&D on the cells. The ones in M3 has the chemistry that Tesla dictated, not what Panasonic said. At this point, it is probably in Tesla’s best interest to keep Panasonic going as a partner (they have been great for them), while they bring in the rest of their parts in-house. Once those are in-house, and they are in decent profits, they can move to their own production.

nissan still produces their own cells and battery packs for all their EVs at their AESC factories. They were planning to sell AESC but the sale was not completed. Only the not yet unveiled 60kwh+ Leaf will use outsourced batteries for now, all other trims will keep their AESC batteries.

“While plenty are ready to bash Tesla on short notice, with such a novelty product”

Novelty product?? When did Tesla get in that business?
What kind are they making — toilet paper with Trump’s face on it?

The anti-Tesla brigade have had this running pravduh line for years that Tesla’s cars are just a novelty, at best a fad, and that soon Tesla’s sales will drop off a cliff. That started in 2008 with the original Tesla Roadster, and continues to this day.

Oh, and the Model S too.

Oh, and the Model X too.

Oh, and the Model 3 too.

Here is a direct quote from an Oct. 28, 2018 blog post on Seeking Alpha:

“Expect Model 3 demand to collapse heading into 2019 as the backlog is filled and subsidies end.”

(I refuse to give a link to that collection of lies and FÜD. If you doubt that sort of thing is common, then just Google [demand for tesla model 3 will collapse] and see what pops up.)

Based on Musk’s tweet, I don’t think he is saying Tesla’s production was currently constrained by cells. He seemed to be saying that more cell production are needed for those products.

But there is plenty of time to increase the capacity since the Gigafactory 1 is expanding.

Electrek reported that the Semi is likely to be released in 2020 (not 2019) based on comments by a Tesla Semi reservation holder. That’s two years, so it seems likely that cell production could be expanded much sooner than 2020.

Semi production to start in 2020, and not 2019? Well, that was an easy prediction, so I won’t pat myself on the back all that hard for making it.