Tesla’s demand for the Model 3 is convincing suppliers to establish new production capacity around Fremont

Fred Lambert | Aug 5 2016 - 5:24 am PT

It’s difficult to overstate the impact Tesla has on Fremont and the East Bay Area. With ~6,000 workers, the automaker is now the city’s biggest employer and that’s without accounting for all its suppliers in the region.

Now we learn of Tesla even convincing manufacturers to come establish new production capacity in the area ahead of its planned production rate increase for the Model 3 program.

San Francisco Business Times reports that Fremont Economic Development Director Kelly Kline confirmed several companies are looking to move near Tesla:

Kline said a half-dozen auto parts manufacturers from around the world are currently poking around the Fremont area looking for space in case they are able to land a contract with Tesla.

“The greatest impact is yet to come,” said Kline of Tesla’s plan for extraordinarily rapid growth.

“We are moving so quickly,” Kline said. “It’s all hands on deck in the city to meet the needs of Tesla and their supply chain.”

Other suppliers are also adding capacity in the area. South Bay Solutions, a high tech machining shop, says that they have currently 6 production machines dedicated to Tesla, but the company plans to soon add 4 more to support Tesla’s increased production.

A&P Solutions, a large Mexican maker of plastic and foam automotive components and longtime Tesla supplier, says that it has been encouraged by Tesla to open a factory in the Bay Area. A&P representative Brosnar López Rodríguez says:

“Tesla is pushing us to open a manufacturing plant here. We think it is important to be here in the Silicon Valley area.”

In a conference call earlier this year, Tesla management highlighted the demand for the Model 3, which has over 373,000 reservations, has been useful for the company when working with suppliers.

Tesla plans to start production in the summer 2017 and ramp up for 500,000 cars in 2018.

Experts also say that Tesla made the pool of automotive talent bigger in the region. It attracts other electric automakers who don’t want to be left behind. Electric car startups Faraday Future and Atieva have since both announced their interest in establishing manufacturing capacity in the region.

San Francisco Business Times also released a list of suppliers with their connections to Tesla and an estimate of the number of employees dedicated to Tesla’s business:

Cypress Semiconductor Corp.