Tesla Says Model S Production Still On for 2012 Even Though Factory Site Unknown

Tesla Says Model S Production Still On for 2012 Even Though Factory Site Unknown

By Scott Doggett May 7, 2010

Experts say automaker needs only 18 months from site selection to start producing the all-electric sedan.

By Scott Doggett, Contributing Editor

Tesla Motors says plans calling for its Model S battery-electric sedan to enter production in 2012 are on schedule even though its production site has yet to be determined, and experts say the Silicon Valley automaker can begin producing the $57,400 car only 18 months from the time a factory site is selected.

Ricardo Reyes, Tesla's top spokesman, said that a report in the Downey (Calif.) Patriot newspaper misinterpreted a Tesla filing with the city that seemed to say construction at a facility being considered for Model S production in that city would require a year and a half and 100-hour workweeks to prepare.

Specifically, the April 30 report in the Downey paper said converting the property - the former NASA Space Shuttle factory 18 miles southeast of Los Angeles - "to suit Tesla's needs would take 18 months, with construction occurring in two 10-hour shifts five days a week, with weekend shifts added 'during peak periods.' "

The account was based on a confidential draft environmental assessment that Tesla was required to submit to Downey city officials that contains details on portions of the automaker's proposed manufacturing facility.

In a phone interview with Green Car Advisor this week, Reyes said that long hours might be required to modify existing structures at the former NASA property to suit Tesla's needs but that the environmental report presents a worst-case scenario, not Tesla's actual plan.

"We wrote that to give us maximum flexibility in order to convert this facility into our production facility," Reyes said. He said it was included solely for the purpose of alerting Downey officials to the potential need for long construction hours to get the site ready to produce cars.

In other words, the last thing Tesla wants - should it choose Downey as the location for its Model S plant - is to commit to the site and then be told by city officials that work at the facility cannot extend beyond normal business hours.

"Most importantly, Model S production is very much on schedule," he said. "The environmental impact [statement] was written to allow us to work aggressively to get the production facility ready."

Reyes emphasized that Tesla has not decided on Downey for its Model S factory and he stated that the company has also completed environmental assessments for the two other locations it is considering.

The Mysterious Third Site

One of those locations, as we've previously reported, is in Long Beach. The third location is not in Southern California, Reyes said, but he declined to be more specific. Here's how the exchange went:

"We've whittled it down to about three sites," he said.

Are all three of them in Southern California? we asked.

"No."

Are all three in California?

"I'd rather not get into a guessing game on the third one," he said. So, it could be in Northern California. It could even be outside the state. Interesting.

Reyes said the environmental assessment that was leaked to the Patriot was supposed to be a confidential document. He would not discuss most of the details contained in it because, he said, that would inaccurately convey the sense that Tesla has made a decision regarding the Model S plant.

"It looks to be pretty precise," he said of the assessment, "but again you have to read it with the knowledge that we wrote it in such a way as to offer us maximum flexibility should we decide to go there and work pretty aggressive hours."

Reyes (right) said Tesla expects to decide on a site for the Model S "in coming weeks." He acknowledged that if Tesla wants to adhere to its announced schedule for production of the Model S - sometime in 2012 - the automaker should make a decision soon. The  former NASA buildings now are being used by television and film studios.

"I'm not denying it's aggressive," Reyes said, "but it's within our plans. We still think it's doable."

When asked what the cut-off date for site selection is beyond which Tesla  would be unable to produce the Model S in 2012, Reyes said: "We're not at that point yet. We obviously have an internal decision time. I don't want to get into, 'If we don't do it by X date, we're screwed.' "

As for development of the Model S, Reyes said quiet-period restrictions that go with Tesla's having filed an intent to have an initial public stock offering prevents him from  making any projections that would seem to direct possible investors to invest in Tesla.

"If I were to say to you that 'Model S production is going amazing, we're right where we want to be, the testing we've been doing has been going great,' if I were to say that to you with utmost confidence, a possible investor might say, 'That's all I was worried about. If Model S development is going so well, I'll invest in the company,' " Reyes said.

"The Security and Exchange Commission wouldn't really care if that's true or not. The SEC would just look at it and say that these guys are trying to put the public at ease regarding the big question mark that it is the Model S." And that, he said, would get Tesla in trouble with the SEC.

Is 30 Months Enough? How About 18?

If Tesla makes a decision on a site for the Model S factory in coming weeks, the question then becomes not where will the company's second electric-vehicle model (behind Tesla's super-quick Roadster, left) be built, but rather will the Silicon Valley automaker be able get the model into production by the end of 2012 - or roughly 30 months from a decision made in the next few weeks.

If the environmental assessment the company filed with Downey city officials is accurate, Tesla is looking to have the following facilities if it ultimately elects to choose that location:

• Press Shop, where body panels and closures would be stamped from aluminum in the press shop.
• Powertrain Assembly, where battery modules received from Tesla's Palo Alto facility would be assembled to create a complete battery pack that would then be moved to the final assembly area for installation.
• Body Shop, where the aluminum body shell and sub-components would be assembled and where brushing, welding, adhesive application and sealer applications would occur.
• Paint Shop, where the assembled body shell would be painted.

Tesla isn't willing to discuss initial production volume at this time, but based on the facilities information we were able to get some experts to give us their take on whether Tesla can start producing the Model S in the first 18 months immediately following factory site selection - assuming the automaker would be occupying existing buildings, instead of building from the ground up. That would leave plenty of room for setbacks as well as the possibly of rolling out production Model S sedans in early 2012.

Their answer was a resounding yes, with a few caveats.

"It depends on the level of tools (hard or soft), the volumes to be produced (high or low), and the amount of labor required per car," Gerald Meyers, a University of Michigan business professor and the former head of American  Motors Corp., said in an email exchange with GCA.

"They are probably headed into low volume, questionable quality, with soft (Kirksite) tools. If the tools and the assembly fixtures are already built and the power train already proven, I could foresee a handful a week to start and then ten a day at the end of a year or two," Meyers said.

Haig Stoddard, who manages the North American light-vehicle production forecast for IHS Global Insight, shared Meyers' quality concerns but is more optimistic, saying in an email that Tesla "can probably do it."

"A lot of the vehicle is likely to be produced outside the assembly plant by Tesla's partners and suppliers, including the chassis," Stoddard said. "It would not be a full-blown assembly plant in the typical sense. I think the bigger fear is that the rush to complete it could cause quality to suffer, especially with precision stamping aluminum body parts."

Leaf's Got 30+ Months

Nissan will begin preparing a plant in Smyrna, Tennessee, later this month for December 2012 production of its Leaf battery-electric vehicle. The Japanese automaker has essentially given itself 30+ months to retool an existing plant and start producing BEVs there - and probably in larger initial numbers than Tesla.

Mark Perry, director of product planning for Nissan North America, did not want to speculate on Tesla's plans, but was willing to provide some information on Smyrna retrofits for Leaf that are illuminating.

Perry said Nissan will be retooling an existing line, bringing in a new stamping facility and doing group-up assembly on a battery plant. Tesla, he observed, won't have to worry about building an on-site battery plant, which would complicate matters.

He wouldn't say what production capacity for the Leaf will be at Smyrna initially, but eventually, the maximum annual capacity of the BEVs will be 150,000 units.

Consultant Jim Hall of 2953 Analytics in suburban Detroit told us the intensive use of aluminum instead of steel in the Model S would help Tesla start manufacturing the vehicle only 18 months following site selection (again, with buildings in place).

"If the car is aluminum, the tooling has the potential to be far, far less expensive and far less elaborate so it's easier to tool," Hall said.

"If they have the facility and if they are doing it with a lot of aluminum, they can probably do that as a turn-key thing pretty well," he said. "Their manufacturing-engineering company will set up a plant for them. A division of Mitsubishi does that. There are companies that do that."

Erin Riches assisted with the reporting for this story.

Scott Doggett:  is an AutoObserver.com Associate Editor.