In a recent Tweet by Elon Musk, he revealed that he has big ambitions for Tesla (as if that wasn’t already clear). In the Tweet Elon says his focus in the future will be on scaling Tesla to an extreme size, which is needed to shift humanity away from fossil fuels.
The reply came in response to a question around Tesla’s master plan 3, a reference to the sequel to Master Plan, Part Deux which Tesla released back in July of 2016. While many of the objectives from part 2 are certainly in progress, they can’t be described as completed.
- Create stunning solar roofs with seamlessly integrated battery storage
- Expand the electric vehicle product line to address all major segments
- Develop a self-driving capability that is 10X safer than manual via massive fleet learning
- Enable your car to make money for you when you aren’t using it
While Tesla does offer a solar roof product, it has faced serious cost and speed challenges, however the battery storage portion has certainly come true with Powerwall 2 being a great success.
Tesla has certainly expanded its vehicle lineup, but nobody could confuse their S, 3, X and Y vehicles as being representative of all major segments. Delays to Cybertruck, Semi and Roadster has certainly inhibited the company on this front, while a Van is probably also on the cards in the coming years to fully check this box.
As we know FSD is currently in Beta in the US and looks quite capable, but is yet to achieve the international expansion to Canada (let alone the rest of the world), as expected. The stated targets to be feature complete by the end of the year, but developing software has a habit of exceeding the timelines set. Given we’re in late April without V11 which should deliver a single software stack, largely leaning on AI to perform driving tasks, 9 months to address the remaining to-do list certainly seems ambitious.
Finally the last bullet point of enabling your car to make money for your, well until FSD is complete, receives regulatory approval, the robotaxi network is launched with a app update (and Tesla insurance is in place), that’s definitely not complete in any way, shape or form.
It was 10 years between Tesla’s Master Plan Part 1 and Master Plan Part 2, so at just 6 years on from that, maybe it’s ambitious to think about what’s next, but that’s certainly what Elon and Tesla are doing, turning their mind to what’s in Part 3.
Elon’s stated goal in this response should send shockwaves through the board rooms of other automakers. As if they didn’t already have a hard enough time catching up to the industry leaver in EVs, they are now hearing their rival place a heavy foot on the accelerator.
As the global demand for EVs takes off, Tesla is really well positioned to capitalise on that demand, ready to open two new factories in GigaBerlin and GigaTexas. A new Gigafactory in Germany is adding vehicle production capacity for Tesla right now, while many other automakers have factory plans coming on somewhere between 2024 and 2026.
The first customers (we expect around 30), will receive the first Berlin-build Model Y, making it a new generation of vehicle for Tesla, made in a next-generation factory (we’ll be looking for some fancy paint and big margins).
Today, Musk re-iterated statements he’s made before, in that producing vehicles on the continent you sell them on is far more efficient than making them, sticking them on boats and the customer waiting months for delivery.
So if new Gigafactories are the answer to scaling EVs and vehicle sales for Tesla, the question really becomes, how many Gigafactories can Tesla build and how fast?
Building Shanghai on an incredibly aggressive timeline was impressive and they learned a lot through that process. With another two Gigafactories essentially in the bag (these still need to scale production), it is likely Tesla has plans for many more factories globally between here and 2030.
Musk has previously announced that he expects the company to be making around 20 Million cars by 2030. In 2021, Tesla produced 930,422 cars, but as we see below, the growth in Gigafactories has a long way to go to provide the 20M target in just 8 years.
- 2010s: 1x Gigafactory – Freemont
- 2018: 2x Gigafactory – Freemont, Shanghai
- 2022: 4x Gigafactories – Freemont, Shanghai, Berlin, Texas
- 2024/2025: ???
- 2027/2028: ???
We know building Tesla Gigafactories takes somewhere between 1-2 years, so we could see an announcement of a location in the next few months with construction starting later this year, with an estimated completion date around 2024/2025.
Is Tesla capable of running more than 2 Gigafactory builds simultaneously, maybe, but that’s a massive draw on resources, so 2 at a time would likely be a maximum and taking into account the capital investment, however interest rates are low right now and appear to be going up, so sooner the better I would imagine.
When it comes to the current Gigafactory capacity, we know Tesla sandbags in their official numbers in the Investor Relations slide decks. In the Q4 2021 update, they have California at 600,000 units and 450,000 at Shanghai. These installed capacity numbers obviously don’t take into account downtime, but the Berlin, Texas factories had zeros against them, but are expected to produce somewhere in the order of 500,000-1Million units each when fully ramped.
Conservatively Tesla’s capacity at the end of 2023 is likely to be 3.5Million (1M+ in Freemont, 1M+ in Shanghai, 750k in Berlin, 750k in Texas).
Tesla has continued to guide for 50% growth per year, but at that rate, you land somewhere around 10.5 Million vehicles by 2030, so the growth needs to be rapid, exponential some would say.
We know Tesla are working on robots now, a potential plan to ramp production in a different way than simply throwing humans at the problem.
Growth would have to be in order of 150%-250% in the later years of the decade to reach 20M and that likely comes from more Factories.
The best data I could find on this sees Toyota as the largest vehicle producer in the world, which at the peak (pre-pandemic) was making around 10.5 Million units per year. Obviously many automakers are expecting to grow as the population grows.
If Tesla can get anywhere close to their objective of shipping 20 Million vehicles by 2030 and the majority of the world is well on their way to transitioning to electric vehicles, then it is likely Tesla will be the largest automaker on the planet.
Make no mistake, the competition will not let this happen easily, but will need to invest heavily and change corporate culture dramatically to have a chance of keeping pace with the fast-moving, Tesla that are already profitable with their vehicles and don’t have a legacy dealership and ICE engine/skills challenges to resolve.