Progress accelerates with the Tesla Model 3 production ramp

This morning, Morgan Stanley raised their price target on Tesla Motors [NASDAQ: TSLA] from $242 to $305 by "adding 75k additional units of Model 3 to our 2018 estimate and nearly 100k units to our 2020 estimate." Street Insider reports the four key drivers from Morgan Stanley's upgrade are: "1. We have revised Model 3 launch timeline and volume estimate, with a significant positive impact on earnings and our price target. 2. The market is moving Tesla’s way on EVs. 3. A recent pull back in efforts by tech firms to make complete vehicles represents a sea change in competitive pressure that we felt represented a great concern to Tesla over the past 2 years. 4. Gigamerica: Tesla stands at the epicenter of US high tech manufacturing job creation which may benefit more than just symbolically under the new administration."


Above: 2017's Tesla vehicles with the Model 3 racing ahead (Image: Motor Trend)

Others on Wall Street agree. Last week, analyst Jennifer Liang of Chinese research firm KGI noted that the Tesla Model 3 looks to be on-track for deliveries in the second half of 2017. Liang wrote to investors: "Versus supply chain management for Model S and X, where nearly all parts and components are shipped to Tesla’s Fremont factory in California for sub- and final assembly, Tesla has brought in two SIs (system integrators), located in Thailand and China, for various sub-assembly for Model 3... [and] its recent acquisition of Grohmann Engineering (DE), a specialist in automated manufacturing, is clearly another endeavor by Tesla to accelerate Model 3 production."


Above: Tesla Model 3 in matte black (Image: Tesla)

It appears that Tesla's former Vice President of Supply Chain Management, Peter Carlsson, concurs that Tesla is positioned for a faster production ramp this time around. Carlsson notes other factors working in Tesla's favor. He explains that compared with Tesla's prior vehicle production efforts, "Things will get a bit easier. Tesla has resolved some issues through vertical integration — doing things internally. And with the launch of the Model 3, the volumes of the business will be more attractive, and I think we will see more suppliers relocate.”


Above: Tesla Model 3 in matte black (Image: Tesla)

And this week, Electrek* reported that Nevada Governor Brian Sandoval's State of the State Address included more news about Tesla's production efforts surrounding the Model 3. Sandoval said, "I’m pleased to announce that Tesla will expand its investment in Nevada by producing the electric motors and gear boxes for the Model 3 at the Gigafactory." This would represent an additional $350 million investment and 550 more jobs. Furthermore, he said that Model 3 production “has filled” the Fremont factory in California. Tesla CTO JB Straubel was present at the address and received a standing ovation [see 28 minutes and 50 seconds in the video below] after Governor Sandoval made the announcement.


Above: Nevada Governor Brian Sandoval's State of the State Address announces additional investment/jobs at the Tesla Gigafactory (Source: Electrek*)

Electrek reports that, "The 550 new jobs will add to the already 1,000 full-time workers at the factory... [and] the news follows the announcement that Tesla and Panasonic started battery cell production at the Gigafactory earlier this month. The company will now be manufacturing both the third generation battery pack and the drive unit of the Model 3 at the plant in Nevada before shipping them to Fremont, California, to be installed in the vehicle’s chassis." It appears, from recent news, that Tesla remains laser-focused on accelerating the Model 3's production ramp in 2017.


*Source: Electrek