Tesla To Produce 'a Few Million' Electric Cars a Year By 2025

HughPickens.com writes: Reuters reports that Elon Musk, speaking at an industry conference in Detroit, said Tesla may not be profitable until 2020 but that Tesla plans to boost production of electric cars to "at least a few million a year" by 2025. Musk told attendees at the Automotive News World Congress that "we could make money now if we weren't investing" in new technology and vehicles such as the Model 3 and expanded retail networks.

Musk does not see the Chevrolet Bolt as a potential competitor to the Model 3. "It's not going to affect us if someone builds a few hundred thousand vehicles," said Musk. "I'd be pleased to see other manufacturers make electric cars." On another topic, Musk said he was open to partnerships with retailers to sell Tesla vehicles, but not until after the company no longer has production bottlenecks. "Before considering taking on franchised dealers, we also have to establish (more of) our own stores," said Musk adding that "we will consider" franchising "if we find the right partner." Musk did not elaborate, but said Tesla "is not actively seeking any partnerships" with other manufacturers "because our focus is so heavily on improving our production" in Fremont. Last year, Tesla delivered about 33,000 Model S sedans and said the current wait for delivery is one to four months. Tesla has already presold every Model S that it plans to build in 2015. "If you ordered a car today, you wouldn't get it until 2016."

Comments

Tell me it ain't so, Elon!

[140Mandak262Jamuna]

No, no, no. Please don't consider franchising or dealing with the devil called auto dealers. For country that loves the automobile, where automobile is the second most expensive thing one buys in a life time, given the love and joy and pleasure the car brings to so many Americans, it is shameful we dread the auto buying experience. We always leave feeling we have been over charged a thousand or two. The auto dealers are the trolls living under the bridge, demanding their pound of flesh for us to get our beloved automobiles.

We were hoping we found a giant killer, a veritable David against Goliath, a David on our side. Now you eh, tu! Elon? Don't. Break their back. Bring national direct auto buying directly from the manufacturer to the nation that deserves it. It is long past time, we let the free markets to be free.

Re:Tell me it ain't so, Elon!

[140Mandak262Jamuna]

It sounds weird, isn't it? But it works. Everyone pays price printed in the weekly circular from the grocery store, and no one haggles. Once you are sure everyone pays the same price, once you are sure the grocery store can't charge you more than the next guy, you stop haggling. The problem is not haggling, it is the secrecy. In stock market people constantly haggle, sell identical products many many times a day and all transactions are listed openly. That works. People haggle for home prices. They love it. Because in the end the price one paid is listed openly in the deed book. Haggling is not the issue, the secrecy, the ability of the dealer to take a gullible customer to the cleaners, and the feeling that you could be the gullible customer is the problem.

Re:Tell me it ain't so, Elon!

[david_bonn]

Can Tesla do something like pick a dealership and add conditions like, "must sell only tesla or only electric cars", "Tesla will retain the right to sell directly too" etc? Why are the standard auto makers not able to sell directly? Is it because A: the law stops them or B: They had signed exclusive agreements already. If Tesla starts with a clean slate, can it have dealerships and sell directly too? Or at least have some more balanced rights and decent negotiating position compared to the gas giants who are wimps against NADA.

Yes, Tesla could do all of that. Most dealers wouldn't sign such an agreement. For that matter, most dealers wouldn't want to sell an electric car.

Seriously, most existing car dealers don't know how to sell an electric car and make money at it. Since, for the most part, a Tesla requires far less maintenance than a modern internal combustion car, and since, for the most part, the biggest profit center in most car dealerships is the service center I can't see how the existing dealer networks can adapt to selling a Tesla or any other electric car.

Right now there is a dizzying patchwork of laws requiring automobiles be sold through dealers and not direct from the manufacturer. Historically, a lot of this was to protect local small businessmen (car dealers, who even today are quite well represented in local government). The other argument was that with a local dealer the purchaser of a car could also be sure his car could be serviced locally as well -- and since an electric car requires so much less service, that logic is kind of questionable.

Oh, and car dealerships (or any franchisee) can protect themselves from being undercut by the automaker by insisting on the same terms as any other dealer in their territory. There is also this thing called the Sherman Anti-Trust act that also prohibits undercutting your own dealers.

Re:Tell me it ain't so, Elon!

[OzPeter]

The problem is not haggling, it is the secrecy.

Before Christmas I walked into my local Firestone franchise and wanted to get 2 new tires. They quoted me $140 a pice. When I said that I could get the same tires for $100 up the street at Costco (but I also needed a front end alignment which Costco doesn't do), suddenly their price was $100. Then the next day when I came in to get the tires changed*, the cost was actually $80 a piece. It's that sort of secret, we won't tell you the true price crap that I hate. Combined with all sorts of attempts to up-sell, and add-on services that I said 3 times already that I don't need.

* What stunned me was that I had 2 good tires and 2 bad tires. Somehow they manage to replace the good ties with the new tires and left the bad tires on the car.

Re:Tell me it ain't so, Elon!

[TheSync]

My father used to own a Texaco gas station. He often competed with stations that were owned by Texaco itself. There were times when those company-owned stations would sell gas for cheaper than they would sell it to him wholesale. Corporate mentality doesn't care about anything but profit.

Of course through the effects of corporate self-interest, consumers got cheaper gas than they could from your father's rip-off gas station...

Re:math

[Anonymous Coward]

It's a typo. The wait for a model S is 1-4 months. The model X is sold out for 2015.

Re:Not if gas stays under $2/gallon

[cellocgw]

What does Elon know that we don't know in regards to oil prices? He ain't selling that many cars if oil stays under $50 a barrel, the demand just won't be there.

While I agree that the preponderance of USA car-buyers are in fact that stupid, i.e. basing their purchase choice on an incredibly volatile price index, I would argue that the intersection of said morons with the set of people who have seriously considered an electric are is vanishingly small.

Few Million a Year is a BIG Stretch Goal

[Koreantoast]

I have tremendous admiration for Elon Musk and Tesla, but ramping up production to that of a top five or even top ten automobile manufacturer is almost unrealistically ambitious. Building up the supply chain for the materials, hiring and training workers, setting up factories, etc... these are things that take years to do even under ideal circumstances. The fact that they're having difficultly with numbers and quality at such a small batch just makes it more complex.

I've also talked with a few industrial engineers that specialize in this type of manufacturing, and at least based on the videos released, the way his assembly lines are setup right now are not going to scale up well. For him to meet his production goals, he's going to have to completely redo the way he does fabrication and final assembly. Should also be pointed out too that the NUMMI plant they're operating out of produced at its peak 6,000 vehicles a week: a healthy number, but an order of magnitude lower than his goals. He will have to expand, probably build more factories, and that will take time. Again, these are just the issues of the factory, it doesn't even go into the other issues.

Re:Few Million a Year is a BIG Stretch Goal

[imgod2u]

The stated ambition was "about a million cars" The article is incorrect in its quote. The liveblog (and video) are much more accurate.

One thing unique about Tesla's manufacturing is that the supply chain is materials. Most everything else is produced by Tesla themselves at the Fremont factory. Many questioned why this decision was made but there are many long-term benefits. When your supply chain is all raw materials, availability becomes much more predictable and your ability to influence the supply by pumping some money into a mine is far easier than say, getting a different company to shape up and manufacture more parts.

The only part of a Tesla that isn't produced at Fremont are the batteries and that's why the Gigafactory is coming online.

Re:More EVs = More Infrastructure = More Sales

[Anonymous Coward]

GM has a crap Volt and a concept car Bolt which wont even be selling for another two years.... GM is not a competitor to Tesla - Teslas competitors are BMW, Audi, Lexus and Tesla is destroying them

Re:math

[stronghawk]

It's a $7500 tax credit. Same for all electrics, including the Leaf. It's only good for the first 200,000 cars sold (unless it gets renewed).

Re:Money talks, electric car walks

[beanpoppa]

Get out of the gasoline mindset. I commute to work 5 days a week, 30 miles each way. I park my car in my garage every night. I fill up my tank about once every 8 days. It takes about 5-7 minutes each time.

With an electric car with a 200 mile range, I would still drive my car 60 miles a day, but I would no longer be stopping at a gas station every eight days. I would be plugging in every night. The only time I would ever need a charging station is when I need to drive more than 100 miles away from my house. I do this MAYBE once a month. So, already my demand at a 'fueling' station is 1/4 of what it was.

Add to this the difference in costs build a fueling station. A public level 2 charging station can be installed for as little as $5000. Level 3 would currently cost about $50,000. A charging station can be anywhere, and can be built in days. Charging station supply will be able to increase very easily as demand does. You can even put one in a school parking lot. The electrical infrastructure to deliver 'fuel' to just about any corner of the continent is already in place. Basically, you charge your car wherever you park it. A gas station is a destination.