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Exclusive: Suppliers question Tesla's goals for Model 3 output

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Marc Leonard
May 20, 2016 18:55

Tesla has taken 373,000 orders for the Model 3 - which has a starting price of $35,000, about half its Model S - and has said it would begin customer deliveries in late 2017.

Citing "tremendous demand," Chief Executive Elon Musk told analysts on an April call that the company planned to boost total production, including the existing Model S and Model X crossover, to 500,000 in 2018 - two years earlier than its original target and a 10-fold increase over the 50,000 vehicles it made in 2015.

He said Tesla would drop suppliers that could not meet deadlines and would bring more parts production in-house than traditional automakers typically do.

The company still is soliciting bids for parts and machinery, according to representatives from several of companies that have received them, as well as industry consultants who monitor such bids.

Automaking consultant Ron Harbour of Oliver Wyman said increasing production at the Fremont plant to 500,000 vehicles in 2018 would require more stamping, welding and assembly machinery that "could take up to 18 months to order and install."

Tesla's production push comes at a time of high demand for machinery and tooling created by a surge in product launches coming from established automakers, said a Detroit-based supplier sales executive.

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Marc Leonard
May 20, 2016 18:55
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