Tesla Fremont is working beyond the capability originally calculated for it. Morgan Stanley analyst Adam Jonas made five key takeaways from his recent Tesla factory tour.

On Tuesday, March 15, 2022, Morgan Stanley analyst Adam Jonas visited the Tesla factory in Fremont, California. He had a tour of the facility and also had the opportunity to test Model 3, Model Y, and Model S Plaid. As a result of this visit, Jonas made the following five key findings:

1. The Tesla Fremont plant is 'bustling' to say the least.
The factory was never designed to produce 450000 units and at its peak produced about 300000 units before Tesla took it over from Toyota, the analyst noted. Tesla is not embarrassed that the factory was designed inefficiently and has few assembly buildings (one of which is a tent). Manufacturing in California also comes with higher costs associated with: sourcing labor, labor costs, and logistical complexity as supply chains are not located nearby. However, all factory workers were actively busy ramping up production of the Model 3 and Y for shipments to North America. Jonas noted that Morgan Stanley sees the Fremont factory as an important learning "lab" for Tesla, which not only produces the world's most popular electric vehicles but also provides lessons for the future expansion of the manufacturer's production.

2. Tesla is demonstrating strong pricing power.
The comparable standard Model 3 trim model was $36000 a year ago and today starts at approx $47000. Jonas thinks Tesla is raising prices from a position of strength and is still not seeing wait times go down, which range from 2 to 3 months wait to 6+ months depending on the model.

3. Raw material impacts is felt, but not at the rate of pricing increases.
The analyst believes that the chips are actually a bigger concern in real time. Tesla has long-term contracts in place and is already feeling commodity pressures that were in the Q4 results and should not come as a sudden impact on margins, believes Morgan Stanley.

4. Capacity & Margins.
Tesla reiterated its volume growth guidance "comfortably above 50%" whether with or without the launch of Giga Berlin and Giga Texas. As Tesla's C.F.O. mentioned during the latest earnings call, microchips remain a major hurdle. Tesla has been creative by recalibrating the software to rely less on individual chips and removed the chips for things like lumbar support and also removed the radar such that now F.S.D. relies entirely on eight cameras and 12 sensors.

5. Full self-driving impact.
Investors believe that the sales rate is about 15% in the U.S. and a much lower percentage in other regions. However, once Tesla releases an updated city-wide F.S.D., this will change.

Source: Re-posted and Summarized from Eva Fox at tesmanian.

My Take: Time to expand Fremont. Elon probably already has it in the works.

Re Posted From: Tesla Fremont Is Working Beyond Capacity

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Tesla Fremont is working beyond the capability originally calculated for it. Morgan Stanley analyst Adam Jonas made five key takeaways from his recent Tesla factory tour.

On Tuesday, March 15, 2022, Morgan Stanley analyst Adam Jonas visited the Tesla factory in Fremont, California. He had a tour of the facility and also had the opportunity to test Model 3, Model Y, and Model S Plaid. As a result of this visit, Jonas made the following five key findings:

1. The Tesla Fremont plant is 'bustling' to say the least.
The factory was never designed to produce 450000 units and at its peak produced about 300000 units before Tesla took it over from Toyota, the analyst noted. Tesla is not embarrassed that the factory was designed inefficiently and has few assembly buildings (one of which is a tent). Manufacturing in California also comes with higher costs associated with: sourcing labor, labor costs, and logistical complexity as supply chains are not located nearby. However, all factory workers were actively busy ramping up production of the Model 3 and Y for shipments to North America. Jonas noted that Morgan Stanley sees the Fremont factory as an important learning "lab" for Tesla, which not only produces the world's most popular electric vehicles but also provides lessons for the future expansion of the manufacturer's production.

2. Tesla is demonstrating strong pricing power.
The comparable standard Model 3 trim model was $36000 a year ago and today starts at approx $47000. Jonas thinks Tesla is raising prices from a position of strength and is still not seeing wait times go down, which range from 2 to 3 months wait to 6+ months depending on the model.

3. Raw material impacts is felt, but not at the rate of pricing increases.
The analyst believes that the chips are actually a bigger concern in real time. Tesla has long-term contracts in place and is already feeling commodity pressures that were in the Q4 results and should not come as a sudden impact on margins, believes Morgan Stanley.

4. Capacity & Margins.
Tesla reiterated its volume growth guidance "comfortably above 50%" whether with or without the launch of Giga Berlin and Giga Texas. As Tesla's C.F.O. mentioned during the latest earnings call, microchips remain a major hurdle. Tesla has been creative by recalibrating the software to rely less on individual chips and removed the chips for things like lumbar support and also removed the radar such that now F.S.D. relies entirely on eight cameras and 12 sensors.

5. Full self-driving impact.
Investors believe that the sales rate is about 15% in the U.S. and a much lower percentage in other regions. However, once Tesla releases an updated city-wide F.S.D., this will change.

Source: Re-posted and Summarized from Eva Fox at tesmanian.

My Take: Time to expand Fremont. Elon probably already has it in the works.

Re Posted From: Tesla Fremont Is Working Beyond Capacity

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