Two million by 2026?
Okay. How does the production work in that scenario? Remember, they’re not going “full tilt” on Monterey - it’s unlikely that it will even start its production ramp until 2025. It took three years for Shanghai to ramp to 750K per year. So where are those two million units being made?
Production of the Model 2 will be developed in Texas where the car design is being coordinated with the production methodology. This will probably get done by the end of 2024, with the finalized production line tech then incorporated into the gigafactories in Shanghai, an expanded Berlin (set for early 2024), and an expanded Texas (in progress). This will be about the time they break ground in Mexico, which I expect will be built at Shanghai-speed and be substantially larger than gigaShanghai. I also anticipate that at about this time they will announce a new gigafactory somewhere in the world where the government chosen will have promised to accelerate the permit and construction processes (India?, Malaysia?).
Production of the Model 2 will continue in 2025 in the expanded Texas and begin in the expanded Berlin gigafctories. This will be supported by additional work shifts in Shanghai. By the end of 2025 the first line will become active in Mexico and by mid-2026 it will be running at a 1M/year run rate. By the end of 2026 the new gigafactory will begin to come on line. So a million from Mexico and most of the rest from Texas, Shanghai, and Berlin, with an additional gigafactory adding significant numbers in 2027.
This pace will be facilitated by the fact that the Model 2 will be designed for mass production. It will be substantially simpler than the Model 3/Y but incorporate the same technologies and most of the same parts. The battery will likely be an iron-based one from CATL that is already in the process of being mass-produced.
Well, there’s the key assumption. It took Berlin a year to ramp to a 250K/year run rate. It took Shanghai three years to ramp to a 750K/year run rate. But Mexico’s going to ramp from initial production to 1M/year run rate in only six months? Not just Tesla, but all of its suppliers are going to be able to scale up production that quickly? After all, if they’re going to ramp to 1M cars, they’ll depend on more than just what they themselves can control. Musk’s comments about Monterey in the most recent conference call might not lead to suppliers rushing in to make large investments in Mexico facilities to feed the Tesla plant just yet.
We’ll find out soon enough, I suppose…
The Shanghai gigafactory broke ground in Jan 2019 and was initially designed for 500,000 cars/year. The first cars started coming off the line by the end of 2019 and it reached the designed run rate for the Model 3 by mid-2020.
The Mexico gigafactory is designed for a million car annual production. I am hypothesizing ground breaking in late 2024, initial production in late 2025, and reaching its designed production capacity by mid-2026. That’s the same time frame as Shanghai. The new Model 2 should be much more production friendly than the old Model 3 and Tesla today is in a much better position to negotiate with suppliers than they were in 2019.
Not really - it took them until the end of the year (a full year after launch and two years after groundbreaking) before they got up to a 250K run rate for the Model 3, which was the original planned capacity for Model 3. It didn’t hit the 500K cars per year run rate for all cars (the planned capacity at initial launch) until early 2022 - three years after groundbreaking.
The other two Gigas tell a similar tale - even having the advantage of the newest manufacturing processes and learning the lessons of Fremont and Shanghai - and we see an even longer ramp. Berlin is designed for an annual production volume of about 500K, and 1.5 years after production started they’re still only at half that volume. Even that milestone was about three years after groundbreaking (spring 2020). Texas broke ground in mid-2020, but didn’t hit their full ramp of 250K Model Y until mid 2023 - and they haven’t even started the CT ramp, obviously.
If Mexico follows a similar path to Giga Shanghai, Berlin and Texas, a late 2024 groundbreaking would lead to the ramp ending about three years later. Or end of 2027. And if they try for an initial capacity of a million units per year (rather than the 500K initial launches of the other three Gigas), that’s just going to add more time.
Indeed, many people who know nothing from actual experience are consumed by mindless fear of the unknown. Sure, the fear itself is real, but there’s absolutely nothing real about the imagined EV experience.
If you have a place to charge at home or work, an EV is massively better than ICE for day to day use. And for road trips, the only way in which it is inferior is if what you prefer is to do bomb runs and you have an iron rear. In an EV you’ll be much better rested, but you won’t go quite as far in a day.
Downsides? Well, in a non-Tesla you’ll also have to deal with unreliable charging, but that problem is going away within the next few months as everybody starts using NACS adapters to charge. And, of course, if you need a form factor that just isn’t available in an EV then an EV isn’t better for you.
-IGU-
My mistakes, I shouldn’t have specified the Model 3 and I am about a year off in my off the cuff scenario. Still think the Model 2 will be easier to produce than the Model 3 or Y so I still think 2026 is plausible.
Have to say though that I think you are kinda missing the forest for the trees. Whether Tesla gets gigaMexico fully ramped in 2026 or 2027 or even 2028 doesn’t really matter. What matters is that if Tesla is producing 2M model 2s and are forced to sell them at a relatively high price because of demand, then the auto market is truly being disrupted.
Two things:
First, global auto sales will be about 71 million this year, and likely will have returned to 75 million (or higher) by 2028. Two million units is less than 3% of that total. Not exactly “truly being disrupted.”
Second, the Model 2 doesn’t exist yet. It’s not inevitable they’ll make and sell two million per year - those were your numbers. Tesla has said it wants to be able to make a popular mass-market cheap small car, but that doesn’t mean they will or can - or on what timetable. It’s not exactly easy to develop and produce a new car that will sell more units per year than any other car in history. Will this end up like the Model Y…or like the new Roadster (which still hasn’t entered production), or the Semi (of which they’ve made only a few dozen in the seven years after unveil)? Or the <$35K Model 3 - of which barely any were offered at that price? Or even “just” an unqualified success like the Model Y…but which is “only” at about 1.2 million units about five years after unveiling, in a more popular auto market segment (SUV)?
I mean, maybe they’ll pull it off. They’ll certainly try, at some point. They kind of have to have another model in mass production if they’re going to get anywhere close to their long term growth goals, so it’s unlikely they’ll shelve production of the Model 2 for other priorities (like the Roadster, and arguably the Semi). But until they actually design the vehicle and price it out, there’s no way of knowing.