Tesla has achieved its goal of producing 1,000 Model 3 vehicles in a day, which would result in 7,000 units per week, but it is now focusing on maintaining that production rate and reducing costs.
As we reported earlier this month, CEO Elon Musk said that he would be walking the entire Model 3 production line, from battery cell production to final assembly, on the 27th and 28th this month in an email sent to employees obtained by Electrek,
He said that all production subsystems need to be able to produce 50 units per hour, which is what he believes is needed for 1,000 vehicles per day, by the end of his second day on the line.
In a new email to employees today, Musk confirmed that Tesla achieved the production rate of 1,000 Model 3 in a day.
But now they need to be able to maintain the production rate, which has been an issue for Tesla after achieving new production levels.
Musk told employees today:
“If you are able to help in any way with getting Model 3 production to a steady 1000 per day at excellent quality, everyone at the company should please consider this their top priority. Body production currently appears to be our limiting factor, so it needs the most support right now. Please focus on simplification and reducing cycle time first and then uptime.”
We contacted Tesla about the email, but the company refused to comment.
After they manage to sustain this production rate over time, Musk wants Tesla to focus on reducing the cost of the Model 3 in order to be able to profitably produce the standard Model 3 at $35,000.
The CEO added:
“It’s important to bear in mind that the cost of the car is made up of about 10,000 unique parts and processes. depending on how you count it, the current cost of a standard range Model 3 would be around $38,000, so each part or process step only costs around $3.80. That means finding cost efficiencies is a game of pennies, even though it might not seem so.”
Musk said that very small efficiency improvements, like “better packing density or rearranging process flow to a fewer forklift moves”, can have a great impact if everyone works on it.
The CEO said last month that the base Model 3 at $35,000 is “probably under 6 months away.”
The ability to maintain new Model 3 production rates after short-term bursts has been a real problem for Tesla.
With a new potential production capacity of 7,000 units per week, it’s also likely going to be a difficulty.
Not only on Tesla’s side, but also for its suppliers who have been burned in the past by the company’s unstable production.
That said, Tesla is now slowing down its ramp up with no clear timeline for when they will achieve the ultimate goal of 10,000 Model 3s per week.
It looks like the focus is now going to be a production efficiency and that should help stabilize Model 3 production.
It’s also encouraging to see Tesla focusing on producing the standard $35,000 Model 3, which has been one of the biggest criticisms about the vehicle program.
At a cost of $38,000, they are not really too far away in my opinion. As production increases, they will achieve improved economies of scale. And with the upcoming new battery module design, they should probably be able to make a $35,000 version profitably in the next 6 months.
Also, we have to keep in mind that very few vehicles will be sold at $35,000 after options.
What do you think? Let us know in the comment section below.