Tesla bringing its China engineers to boost the California factory output and lower production costs on the way to the Model 2
Tesla will be dispatching about 200 of its employees from China to California in order to retool its old factory in Fremont for the increasingly complex production tasks it is facing. Tesla's Fremont plant is the only place that makes all electric car models that Tesla is currently selling, while at the same time being the least suited for cheap and efficient mass production in comparison with the shiny new Giga Berlin or Texas factories, as well as the recently upgraded Giga Shanghai plant.
It is precisely the Gigafactory in Shanghai that Tesla will be poaching automation engineers and production line operators from for a period of at least three months. They will be overseeing equipment installation and production training that should help boost the overall manufacturing capacity for the Model Y/3/S/X lines that are assembled there. Tesla's increasingly complex supply chain and mounting global shipping challenges have resulted in model fragmentation with units built in different factories having different features or even battery types.
Boosting the Fremont factory production capacity by the Giga Shanghai engineers may lower the waiting times for the Model Y bestseller. US customers now have to wait until the spring for its delivery, whereas the wait time in China was recently shortened to just a week after the Shanghai factory upgrades, and even the Model Y price was lowered there.
Moreover, Tesla's head of investor relations Martin Viecha recently sat for an interview at a Goldman Sachs conference and said that the EV maker will have two overarching goals for its current 5-year period - ensuring steady battery supply and lowering car production costs - in order to develop its first mass market electric car, dubbed the Model 2. While Tesla may have already started work on a cheaper and smaller Model 2, one of the main challenges towards cutting its production costs in half compared to the Model 3 remains factory efficiency.
Currently, the sprawling Fremont facility is its least efficient production ground, admitted Mr. Viecha, yet with the biggest share in the overall mix, which raises the average cost to manufacture a Tesla car to US$36,000. In order to arrive at a sub-US$20,000 Model 2 production price, yet keep its enviable profit margins intact, Tesla would therefore have to upgrade and retool the Fremont factory the way it did in Giga Shanghai. With the reported transfer of a 200-strong team of production employees from China to California, Tesla may be doing just that.