How many Model S cars can Tesla really sell?
Last week, our own John Goreham penned an article in which he predicted that the major manufacturers' electric cars (Volt, Leaf) would ultimately succeed in the marketplace while small upstarts (Tesla, Fisker) would not. That article can be read here.
As would be expected, John's premise created a lot of buzz and commentary. Those of us in the automotive journalism trade know that anytime we mention certain vehicles in a less than favorable light, we will be inundated by the hardcore fans of that car who will make it clear that they think we're idiots. I myself have said that the Chevrolet Volt is "not all that" and was avalanched by "Voltophiles" calling me numerous names and nitpicking over every detail of my penmanship to find fault. This doesn't just happen with electric cars, of course. An article I wrote regarding the Chevrolet Corvair was also quite controversial, even among other automotive journalists who left commentary on my Facebook and International Motor Press Association threads regarding the article. Such is the nature of journalism.
It is knowing that the same contingent of Tesla fans will likely descend upon me that I delve into that car and its dubious future here. While I have little doubt that Tesla CEO Elon Musk's plans to build 20,000 cars next year are at least viable, it seems unlikely that the company will be able to sell twenty thousand cars in the same time frame.
Can Tesla Make 20,000 Cars?
Although there is ample room for failure, of course, it does appear at least feasible that the company could build that many cars in 2013. It has the facilities, would not need to expand its current workforce by much, and appears to have the supply lines for its needed parts and materials in place. Recent reports and filings by the company, which is relatively transparent now that it's publicly traded, show that batteries, motor parts, and aluminum - the material that makes up about 60% of the car's total - are lined up and already growing. The company has surpassed the 1,000 frame and rolling chassis mark in its production output. Many of the problems that could be expected to happen in these first stages of the car's production have happened or are happening and being resolved now, according to Tesla's Q3 2012 filing (more here).
The only thing that could slow Tesla down outside of an act of nature or similar event would be quality issues as production grows. Looking at Tesla's closest neighbor in the EV business, Fisker, illustrates how heavily this can impact a growing carmaker's mojo. It's very, very likely that Tesla will have at least one recall event during 2013, but if they are lucky, it will happen early on and be quickly taken care of and remedied on the production line before too many units have been affected.
Tesla already has, or at least is well on the way towards putting together, a full production shift for the S. To make 20,000 cars is only about 1,700 cars a month and is well within the capability of a single shift in a 20-day production month. The former NUMMI factory they are utilizing is capable of these numbers many times over if fully utilized.