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Tesla: What's My Line(s)?

Nov. 01, 2017 7:25 PM ETTesla, Inc. (TSLA)584 Comments
Montana Skeptic profile picture
Montana Skeptic


  • Tesla will need another Model 3 line. Where will it put it, and how will it pay for it?
  • Take a bow, Steve Funk. You were right about Fremont’s Model 3 capacity.
  • Take two bows, Edward Niedermeyer. You nailed it, twice, about what’s really happening with the Model 3 production lines.
  • The Solar Roof story gets ever more vague and laughable.
  • And Tesla sets two goals that it is unlikely ever to meet.

I’m writing this after reviewing Tesla’s (NASDAQ:NASDAQ:TSLA) Third-Quarter 2017 Update, and before the conference call begins.

There are some fascinating pieces to the Update.

Tesla Needs Another Model 3 Line

First, most fascinating, is this one:

With respect to the timing for producing 10,000 units per week, it has always been our intention to implement that capacity addition after we have achieved a 5,000 per week run rate. That will enable us to make the next generation of automation even better while making our capex spend significantly more efficient.

Quite obviously, an additional production line will be needed to reach 10,000 cars per week. And so, it appears, Seeking Alpha’s own Steve Funk was right all along. Tesla’s existing Model 3 capacity is no more than 5,000 cars per week. Steve, take a bow.

And, Edward Niedermeyer of The Daily Kanban, front and center, please. Now, a big bow. And another. Because I think your most recent blockbuster article about how Tesla originally ordered two Model 3 production lines, but then cut it back to one, has just been vindicated.

And, Mr. Niedermeyer, I suspect Tesla’s reference to the “next generation of automation” is powerful support for your earlier story about the pilot stamping plant in Michigan.

It is much to the shame of mainstream business press outlets such as Reuters and Bloomberg (though The Wall Street Journal is a notable exception) that they never picked up and pursued those stories.

Is there room at the Fremont plant for this additional line? Everything I know about Fremont says the answer is, no. So, Tesla will need a great deal more capital to complete and install such a second line.

So Much for "Alien Dreadnought"

Tesla’s Update states:

[T]he Model 3 production process will be vastly more automated than the production

This article was written by

Montana Skeptic profile picture
I have a J.D. degree from Yale Law School, practiced for 30 years as a trial lawyer in commercial cases, and in the decade that followed managed a $1B+ portfolio for a family office. I have recently retired and am free to write about whatever I want. And so I will.The fellow in my icon is Galileo Galilei, who famously said: Eppur si muove.I say, less famously: Time is the only reliable solvent of folly.

Analyst’s Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am short TSLA via long-dated options.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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