Too Many People? Tesla Says It Has Run Out Of Room At Freemont Factory

The article is worth reading. Key takeaways:

- The plant was once used by GM + Toyota to teach Toyota how to do lean production in the US.

- When GM + Toyota ran it, they produced 64,764 vehicles annually using 2,470 employees (26.2 vehicles per employee annually) in the FIRST year of production

- GM + Toyota eventually ramped up to 357,809 vehicles using 4,844 employees (73.8 vehicles per employee)

- The same plant, in Tesla's hands, produced 83,922 vehicles using "between 6,000 and 10,000 workers", meaning their numbers are 8.4 to to 14 vehicles per worker, and that's with all their robotics.

- This makes Tesla about 1/2 as efficient at their peak as GM+Toyota were in their startup year! "The number of people Musk's got in there has a great deal to do with why he doesn't make money building vehicles," said automotive manufacturing consultant Michael Tracy of Agile Group.

Anyone still wondering why Tesla can't break even, and is continuously bleeding red ink? And always needing to tap capital markets for operating capital?

That is a great way to think about and measure their efficiency and I agree we should analyze them the way you described. There are three additional factors:

1.) The average selling price of these cars is triple the GM/Toyota cars, even factoring that in it does not get to 73.8 though.
2.) The plant is already equipped to handle a very large volume of Model 3s, which require about 20% of the labor hours to build as the S. With the current footprint, the plant should be able to ramp to 500,000 cars/year. Many heads and capacity are dedicated to this product which is not yet being volume produced, next year would be the real time to evaluate the overall efficiency.
3.) There is a major expansion that was already approved by the city of Fremont that will let the factory get to a theoretical 1M cars/year. This would all be for existing lines though (and maybe the Semi), and not for the Model Y.

Steve, it is the other way around. Toyota was teaching GM how to efficiently make cars. I believe there are college courses about Toyota Production systems (TPS).

monster: You're right. My mistake. The article says "...The joint operation between General Motors and Toyota began in 1984 and was intended to help the Japanese automaker learn about doing business in America and teach GM the principles of lean manufacturing."

So:
1) GM taught Toyota about doing business in America
2) Toyota taught GM about lead production techniques
3) Two-way learning exercise

Typo: "lead" -> "lean"

Aspy11: Possibly not! As long as there is a sufficiently high number of Tesla Believers who are willing to bid up TSLA shares, and who buy new batches of stock every time Tesla Motors issue them, then Tesla can keep tapping capital markets to stay alive. There's no telling how low this might last.

Aspy11: Lots of people are betting on TSLA collapsing soon. It's the most shorted stock at this time! Timing the market is incredibly tough.

Good luck shorting TSLA. Waymo was just valued at $70 billion and they don't even have an official product yet. Tesla is only one year behind Waymo in terms of tech and their platform is 25% of the cost, not to mention Tesla makes the cars themselves instead of just the autonomous platform.

Agent OO9 - Like the article says... it's 'Fremont' (not Freemont).

Really time to get a proof reader.

Why would GM want to teach a competitive entity how to be more efficient?

I know the whole Matrix/Vibe relationship and joint production but GM would have been better off going it alone and using that strategic advantage to out manufacturer Toyota and reap the rewards of lower production costs. Furthermore, I find it hard to believe that Americans could be more productive than Asians with the UAW Mafia Vulcan death grip.

Coming from a manufacturing background I fail to see the benefit or logic here but that could be my small brain. Perhaps someone could chime in and enlighten me -that would be greatly appreciated.

NUMMI was NOT about GM teaching Toyota anything but quite the opposite. It was how GM learned to do just-in-time component sourcing for production.

Thanks Matt!