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Tesla Model 3: aluminum part supplier announces investment to increase output ahead of Model 3 production


As the discussion around what parts of the Tesla Model 3 will be made of aluminum and what parts will be made of steel was renewed by what looks like the first picture of a Model 3 chassis we posted this morning, one of Tesla’s aluminum part suppliers announced an investment to increase output of certain parts ahead of Model 3 production.

The level of steel versus aluminum present in the Model 3 is important to reservation holders since it could give insights into repair costs.

Steel is both cheaper to produce and less expensive to repair, but aluminum is lighter and therefore, you can achieve a greater range while using fewer batteries. But if , God forbid, something happens to aluminum parts on your car, repairing them can be very expensive.

In a new report from Nikkei (Japanese), UACJ, a major Japanese aluminum group, announced that it is investing 3 billion Yen (~$26 million USD) into an aluminum part manufacturing company that it acquired last year in order to support production for Tesla’s Model 3.

Last year, UACJ acquired Michigan-based SRS Industries which was already making parts for Tesla’s Model S. Now they have apparently won a contract for the Model 3 since UACJ says the new investment will support “roof rails and supportive parts for frames” production for the all-electric vehicle.

The company expects that the investment will allow them to raise production capacity ~50% by the end of the year.

When launching an accelerated production program for the Model 3 after receiving more pre-orders than anticipated last year, CEO Elon Musk said that the company would enforce a rigorous sourcing program both with internal teams and suppliers in order to meet its deadline.

The deadline is July 1st, 2017 and Model 3 production should start soon after.

The ramp up to volume production is less clear. While Tesla plans to be at an overall annual production rate of 500,000 cars at some point in 2018, it’s not clear what it will look like from July up to that point.

Based on the high-end of Musk’s own guesstimate, Model 3 production could outpace the combined production of both Model S and X by the end of the year, but Musk emphasized that it was only a guess since production ramp ups are hard to estimate.

A supplier already fell victim to Tesla’s stringent supply program for the Model 3. Last month, the automaker canceled a $100 million axle-drive pumps contract with German supply after they failed to comply with Tesla’s requirements, according to the company.

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