Tesla was finally forced to announce a shutdown of its Fremont factory yesterday, but it’s not all bad for the automaker. Sources told Electrek that Tesla is going to use the factory shutdown to do upgrades and improve production.
After of few days of managing to push what many thought was inevitable, Tesla announced yesterday that it will shut down the Fremont factory and Gigafactory New York at the end of the day on March 23.
The goal is to reduce the risk of exposure to the coronavirus to Tesla’s thousands of employees and help flatten the overall curve of the virus.
Tesla fought the decision and managed to get a few more days of production, but the shutdowns, especially the one at Fremont factory, where Tesla produces most of its cars, is expected to have a major impact on the company’s quarter.
However, we’ve learned that Tesla is going to make the best of it. The company can still use a small workforce at the factory and it plans to make upgrades to its production lines.
At the Fremont factory, Tesla was already planning some major expansions to increase its Model Y production capacity.
The automaker recently filed a major building permit application worth $27,937.00. When the cost of the permit is that high, it generally means that it’s a somewhat major construction project:
The application only mentions “civil sets that include site improvements and foundations.
A source familiar with Tesla’s plan told Electrek that the automaker plans to again use the infamous ‘tent’ production line.
When ramping up Model 3 production, Tesla famously built a “tent”, which was actually a more permanent sprung structure, to house a new Model 3 assembly line.
The new line enabled them to reach the important milestone of 5,000 Model 3 cars per week.
Now we are told that Tesla plans to do something similar for Model Y and deploy some production capacity under a sprung structure to go in operation when they can reopen the plant.
Furthermore, while Tesla Gigafactory Nevada is officially still operating, sources familiar with the matter told Electrek that production is being reduced since the plant supports Fremont factory production with electric drivetrains and battery packs.
They also plan to use the downtime to make some upgrades and improvements to the factory.
This is a little silver lining for Tesla. This Fremont factory shutdown is going to be hard on Tesla’s Q1 and Q2 results, which will likely both be short of thousands if not tens of thousands of deliveries because of it.
However, there’s a chance for Q2 if Tesla deploys this new capacity for Model Y.
Maybe it can result in a faster production ramp-up and actually higher deliveries in Q2. It’s too soon to tell and the overall economic situation in Q2 will likely make car sales difficult in general.
Nonetheless, it’s something to keep an eye on.
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