Model X production ramp; Take a behind the scenes tour of the Tesla Factory [Video]

Posted on February 08, 2016 by Matt Pressman

Tesla Motors (NASDAQ: TSLA) will be announcing their fourth quarter financial results later this week. Many Wall Street watchers are tuning in for status on the production ramp at the Tesla factory in Fremont, California. Impatient Wall Street analysts have "tunnel vision" on accelerating hasty production of the Tesla Model X. Some have questioned Tesla's ability to expedite Model X production in order to speed deliveries to customers. Yet, there is a question these analysts might want to ask themselves: should speed trump quality? In contrast, some cooler heads have prevailed more recently. Some Wall Street analysts are predicting that the Tesla Factory is performing right at the level it should be -- and we've even got a behind-the-scenes video from the factory in Fremont with a sneak peek at the Tesla Model X (and S) being built.

But before we get to the video, let's take look at some of the more prudent comments of late. Today, Dan Galves at Credit Suisse explained"We remain bullish on TSLA, with high conviction on a 12-month view and also constructive in front of Wednesday's print... we see the concern on Model X production ramp / volumes, the subject of several recent bearish notes, as overdone at this point. According to [Tesla Motors] management, the production process is quite dialed-in right now, there are no critical unresolved design issues, and once re-designed parts are available, the ramp should progress quickly. Meanwhile, Model S production continues to run at very high levels."

This view was also echoed by Stifel’s James Albertine and Maria Klioutcheva, "we suspect quality trumps speed with the new Model X. Does this suggest 'falcon-wing' doors are the nail of the vehicle, as some automotive pundits have suggested? We suspect not." And, Dougherty & Company’s Andrea James commented on the Model X and noted: "Tesla has been prioritizing quality above all else, ramping exponentially.” To that end, let's take a look at the attention to quality at the Tesla Factory in Fremont.

Kudos to CBS San Francisco* for taking us on their tour of the Tesla factory. It looks like the factory is humming along at a steady pace. Regardless, Tesla will take the necessary time needed to focus on superior quality and that's something that Wall Street should openly applaud. Nevertheless, with Wednesday almost here, we'll hear soon enough on production status. We suspect analysts just looking at the X ramp have a myopic, limited view of the business as a whole. 

Why? It's likely Tesla CEO Elon Musk will have far bigger news to report. With Tesla Energy deliveries starting and the Model S outpacing its luxury class competition (see chart below), the Model X production ramp is only a small part of a much larger story unfolding. A key focus should be on the lead-up to the mysterious and much-anticipated Tesla Model 3. And, to make the Model 3 a reality, progress at Nevada's Gigafactory is perhaps more revealing than the factory in Fremont. And, according to Goldman Sachs, the Tesla Gigafactory is now in the leadership position for "rapidly advancing battery technology... shaping up to be a strategic linchpin for the low carbon economy." 

Source: Motley Fool

It's no wonder CEO Elon Musk bought up another $100 million worth of TSLA upping his stake to 1/5 of Tesla Motors (at time of close 2/2). So, we'll be there to listen in on Wednesday, February 10th during the conference call with Musk at 2:30PST/5:30EST. And, afterwards, we'll recap all the news as we look forward to an ever-evolving (and exciting) 2016 ahead...

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*Video: CBS San Francisco / Photos: EV and More

Posted in Elon Musk, Model 3, Model S, Model X, tesla factory, tesla model s, Tesla Model X, Tesla News, TSLA


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