Tesla Looks To Expand Production Facilities Across Globe

By · August 22, 2013

TeslaFremont

With sales of its Model S on the rise and more models on the way, Tesla CEO Elon Musk told told Bloombergthat the company is looking to build factories in Europe and Asia in order to increase Tesla’s production capabilities.

A possible expansion anticipates the launch of a more affordable, smaller Tesla electric car. Planned as Tesla’s third production car, the vehicle will feature a range of about 200 miles, and is expected to sell for as low as $35,000, making it the most affordable Tesla yet. Built on an all-new third-generation Tesla chassis, Tesla’s recent trademark registrations indicate that it will be called the Tesla Model E. Of course, the Model E—or whatever it will be called —won’t arrive for at least another two years.

In the meantime, Tesla will be busy: the company plans to produce more than 20,000 Model S sedans in California this year, with hopes to double that figure for 2014. Next year, Tesla will also begin production of the Model X luxury SUV at its Fremont, Calif. plant. Built on the same platform as the Model S, the SUV will features similar performance to Tesla’s first mass-produced car, but includes seating for seven adults, two powerful electric motors for all-wheel drive, and iconic falcon-wing doors.

While these figures likely represent only a fraction of the 500,000 cars per year Tesla’s Fremont factory is capable of producing, Musk said additional factories will be needed to make Tesla’s affordable future EV. “Certainly, within five years we’ll have our mass-market electric car available,” Musk said. “We’ll start seeing hundreds of thousands of electric cars going to market every year.”

To prepare for that, Tesla is keen to follow the lead of other major auto manufacturers and build cars close to the markets where they will be sold. And that means building additional plants in Europe and Asia. “We’ll try to locate those close to where people are, close to where the customers are, to minimize the logistics costs of getting the car to them,” Musk explained. “I think long term you can see Tesla establishing factories in Europe, in other parts of the U.S. and in Asia.”

It’s not clear if Musk intends each regional factory to manufacture cars and parts from raw materials, as is done in Fremont, or simply assemble vehicles in its markets. Tesla’s first car, the limited-production two-seat Roadster, was assembled in California with a chassis built in Norfolk, England, while European versions were assembled in Europe with powertrains sent from California. (Tesla recently opened a small facility in the Netherlands to assemble Californian-made Model S parts for European-market cars.)

Tesla's evolving manufacturing process isn’t new or unusual in the automotive industry: car companies around the world produce and assemble their cars to reduce shipping costs, as well as emissions. However, electric car manufacturing, with its unique components, can require long and sprawling supply chains.

Musk hasn’t detailed where factories will be built, or when. But one thing is clear: Tesla is expecting to encroach upon markets currently dominated by major car companies like Ford, General Motors, Nissan, Toyota, and Volkswagen.

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