Tesla Factory Racing To Re-tool For New Models

Categories: Mobility

Fremont, Calif. — Xavier, Wolverine, Iceman, Thunderbird and Cyclops were all working hard.

In balletic movements, the massive robots, among the world's largest industrial machines, were silently building Tesla electric cars.

Named by Chief Executive Elon Musk after popular comic book characters, the robots are essential features of the 5.3-million-square-foot Tesla plant that every week turns out as many as 1,000 of the $85,000-plus Model S sedans.

Musk and his electric car company are going to need all the superhero robots they can find.

Having just reported a $107.6-million fourth-quarter loss that sent its stock tumbling, Tesla Motors Inc. intends to double vehicle production in the next year as it finally introduces its Model X sport utility vehicle — after about two years of delays.

Meanwhile, Tesla is racing to finish the design of its Model 3, the "affordable" Tesla, expected to sell in the $30,000 range after government subsidies. Musk's company is chasing General Motors Co., which plans a 2017 release of its all-electric Bolt, with a similar price and 200-mile driving range between charges.

"Tesla is not going to be the only kid on the block anymore," said Thilo Koslowski, vice president of automotive for Gartner Inc. "To date, they have been a highly desirable brand with a unique product. Maintaining that, going forward, will be tricky."

Tesla has so far failed to build cars as quickly as customers want to buy them. The company has outstanding orders for 10,000 Model S sedans, and reservations for 20,000 of the Model X SUVs, according to filings.

Still, the Palo Alto-based automaker commands an almost cult-like devotion among owners and especially employees.

Related Tesla stock plunges after it posts $108-million quarterly loss
Tesla stock plunges after it posts $108-million quarterly loss

"We have to succeed," said Adam Slusser, who runs factory tours at the Fremont facility. "If we fail to bring about this electric-car revolution, this chance may not come again in our entire lifetimes."

Musk and his Model S have fans on Wall Street too. Tesla shares, even after their midweek tumble, are trading at about $200. That's up from about $40 two years ago, though well off the peak of $286 in September.

Musk is "a Thomas Edison for our times," said Cathie Wood, founder and chief investment officer for Ark Investment Management. "He is ushering in a very important period of time, when we are shifting away from internal combustion technology to battery technology."

More skeptical analysts believe that this year will be crucial to Tesla's long-term survival. To succeed, the company must deliver on the hype surrounding Model X — an all-electric, seven-passenger SUV with a price tag similar to Tesla's only current car, the Model S. The sport sedan starts at more than $70,000 and typically sells for about $100,000.

"Tesla announced the Model S in 2008 and came out with it in 2012, and the car could do no wrong," said Michael Harley, editor in chief of the auto sales search engine AutoWeb. "But the company hasn't delivered anything innovative or exciting since."

Tesla has lost its luster, he said, and could soon lose credibility.

At the Fremont factory, the massive machines — and an estimated 6,000 human workers — struggled in late 2014 to produce a high-performance version of the Model S, the P85D, while retooling the factory to churn out the upcoming Model X.

Tesla had promised to hit a 2014 production goal of 35,000 vehicles, and just managed to do it — working through the Thanksgiving, Christmas and New Year's holidays. The company so exhausted its workforce, Musk told analysts this week, that he gave the entire factory a week off in January.

Musk has announced his intention to double production every year for the next several years. Last week he told analysts that the company expected to deliver about 55,000 Model S and Model X vehicles in 2015.

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