Tesla Motors Inc (TSLA) Suppliers Warn Musk Expansion Goals Are “Implausible”

tesla motorsTyler Durden:  Having cashed out a few hundred million dollars worth of stock to some diluted greater fools – with the help of Goldman Sachs – the ugly face of reality of descending on Elon Musk and his government-subsidized car maker. 

As Reuters reports, Tesla suppliers are loudly questioning Musk’s production goals as he moved up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned.

Rather shockingly, given the huge demand, auto-making consultants and supply executives, who asked not to be identified, admitted that Tesla has still not finalized the Model 3 design and specifications,warning that Musk’s goals were “implausible,” in part because Tesla’s battery factory in Reno, Nevada, was unfinished; and furthermore, aluminum, lithium and other materials – already in short supply – “could be another limiting factor.”

Tesla Motors Inc has surprised parts makers with plans to move up the launch of high-volume production of its Model 3 to 2018, two years earlier than planned – an acceleration that supplier executives and industry consultants said would be difficult to achieve and potentially costly.

In the past three months, Tesla has told suppliers the company was doubling its original production projections to 100,000 Model 3s in 2017 and 400,000 in 2018, several supplier industry executives familiar with the plans told Reuters.

Tesla has taken 373,000 orders for the Model 3 – which has a starting price of $35,000, about half its Model S – and has said it would begin customer deliveries in late 2017. But it has made no promises, and, on earlier models, customers waited months for delivery.

Citing “tremendous demand,” Chief Executive Elon Musk told analysts on an April call that the company planned to boost total production, including the existing Model S and Model X crossover, to 500,000 in 2018 – two years earlier than its original target and a 10-fold increase over the 50,000 vehicles it made in 2015.

Musk said the Model 3′s simpler design, new production hires and enthusiastic suppliers would help the company make its goals. He said Tesla would drop suppliers that could not meet deadlines and would bring more parts production in-house than traditional automakers typically do. He did not specify how much or which parts.

Industry experts said Tesla’s new goals were extraordinary and raised doubts it could meet them… ”They’re aiming to be up and running in 2018, so they have two years – and suppliers are wondering if they’ll make that deadline.”

One complication is that Tesla has not finalized the Model 3 design and specifications, said auto-making consultants and supply executives who asked not to be identified because Tesla prohibits them from disclosing contract details.

Musk has said the Model 3 design and engineering would be complete in June, 13 months ahead of the planned production startup.

Under ideal conditions, automakers have launched new assembly lines in 18 months, but they typically take two to three years after the first tooling and supply contracts are signed, several manufacturing consultants said.

The handful of North American auto plants capable of building 500,000 vehicles a year are all run by automakers with decades of experience, they said.

One complication is that Tesla has not finalized the Model 3 design and specifications, said auto-making consultants and supply executives who asked not to be identified because Tesla prohibits them from disclosing contract details.

Musk has said the Model 3 design and engineering would be complete in June, 13 months ahead of the planned production startup.

Under ideal conditions, automakers have launched new assembly lines in 18 months, but they typically take two to three years after the first tooling and supply contracts are signed, several manufacturing consultants said.

Auto-making consultant Ron Harbour of Oliver Wyman said increasing production at the Fremont plant to 500,000 vehicles in 2018 would require more stamping, welding and assembly machinery that “could take up to 18 months to order and install.”

Jeff Schuster of industry forecaster LMC Automotive said the goals were “implausible,” in part because Tesla’s battery factory in Reno, Nevada, was unfinished.

Aluminum, lithium and other materials – already in short supply – “could be another limiting factor,” said Sam Fiorani of AutoForecast Solutions.

We note that Tesla continues to have delivery delays for its Model X SUV. Its Model S also missed delivery targets when launched.

And, as Jalopnik details, build quality remains dismal…

Tesla, the little American car company every other automaker loves to hate, recently lent a Model X to Fortune for a review. The car was not what one might expect of a $150,000 luxury car, unless something like an old Jaguar has been in your ownership history.

Fortune adored the Model X for its speed, its infotainment system, and its semi-autonomous mode. Fortune was less enamored with the seat controls that conspired to squish a baby.

“The theory is,” veteran auto tester Sue Callaway says as she places an occupied baby seat in the middle row, “the seats move together so the baby doesn’t get squished.”

“Oh! Nope,” she says, watching the baby seat immediately get pressed up against the back of the fronts. “Baby’s getting squished. That’s not good. It’s not supposed to hit the back of the driver’s seat.”

Indeed it is not.

Quality issues extended past baby-squishing, with weatherstripping peeling off one of the falcon doors that Tesla itself admitted were more ambitious than advisable. The carpet, as well, was coming off in places.

If this was an isolated issue with the Model X, one might figure that this was just a rare preproduction glitch or two. But the Model X has repeatedly been in the news for quality issues. There have been complaints about the car’s windshield, with its doors, its rear seat latches, and assorted other fit and finish problems.

Again, these issues once were the norm (decades ago) for ultra-luxury cars as expensive and as exclusive as the top-of-the-line Model X and the Model S. But this doesn’t bode well for people buying low-cost Teslas, or for the people who are expecting a mass produced product from the upcoming Model 3.

Jalopnik has reached out to Tesla for comment but has not yet heard back.

Still, all the time that Goldman Sachs and the Wall Street cheermongers pump out self-serving shit to a gullible public looking for a lottery ticket, the likes of Tesla (and Theranos) will continue to defy gravity

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