Wall Street analysts happen to be touring Tesla’s massive factory in Fremont, Calif., and they’re returning with similar conclusion: Elon Musk’s electric-vehicle company gets ready for something big. Inside a sign of this enthusiasm, Robert W. Baird & Co. upgraded its Tesla rating on Monday morning following a factory tour.
Tesla spent some US$1.6 billion on major upgrades this past year as it prepares to launch its first attempt for a mass-market car – the Model 3 – on March 31. The transformation is striking, based on auto analysts at Stifel Financial Corp, Credit Suisse Group AG, and Baird. Nokia’s are telling investors that Tesla is learning from the mistakes that delayed its previous launches and it is on track to make the shift from producing tens of thousands of US$80,000 cars to thousands and thousands of US$35,000 cars – assuming the Model 3 proves a success with drivers.
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Here are some of the changes the analysts witnessed on Teslas factory floor and in discussions with Tesla’s new chief financial officer, Jason Wheeler.
‘Stunning progress’
Last week, Stifel analysts returned using their fourth visit in four years to Tesla’s flagship factory in Fremont. “In roughly one year since our last visit,” wrote analyst James Albertine, “the progress witnessed is truly stunning.” Tesla shares have jumped 45 per cent within the last month as Musk, the main executive, sought to reassure investors the company is still on track after the challenging and much-delayed launch from the Model X luxury SUV.
New aluminum stamping press
Stifel and Credit Suisse both noted Tesla’s new aluminum stamping press, which Credit Suisse’s Galves says has 10-20 times the creation of Tesla’s older machine. The groups of the Model S and Model X are generally made of aluminum, which costs twice as much as steel but weighs less. Tesla hasn’t yet disclosed the composition from the Model 3. Keeping the weight down on electric vehicles helps achieve the maximum range from the battery, but maintaining an account balance between cost and performance is vital for a mass-market plug-in car.
Paint shop
Tesla has built a new state-of-the-art paint shop that’s capable of scaling up to 500,000 cars a year. That happens to be Tesla’s production forecast for 2020, a ten-fold increase from last year’s sales. If Tesla would be to make that happen lofty goal, paint jobs won’t be considered a holdup.
Faster assembly lines
Tesla’s assembly line is faster and much more automated than those observed during a tour 1 . 5 years ago, according to Credit Suisse’s Galves. The body assembly lines are now rated to create about 175,000 cars a year, with final assembly capability of more than 100,000 cars. 
‘Dimensional design studio’
This new area of the factory is really a place where Tesla engineers can “stress test vehicle design features in a controlled environment on-site,” said Albertine.
More Robots
“Robotics systems are customized, production processes are revolutionary, and attention-to-detail/supply chain management is improving through the minute,” wrote Stifel’s Albertine. “We don’t believe this production process is one competitors can certainly recreate.” Tesla’s manufacturing skills can help the organization reach its target in excess of 25 per cent gross income around the Model X, according to Baird’s Kallo.
More humans
Tesla expanded its workforce by 29 percent last year, to 13,058, based on company filings. That’s up from fewer than 900 employees in 2010. The workers have been consolidated within the Fremont facility, with “several football-field sized areas spanning the admission to the facility with desks, computers and seemingly invigorated staff,” Albertine said. “There was a power and buzz within the facility that is difficult to imagine being an outsider.”
Batteries
Tesla is already shifting battery production try to its massive “gigafactory” under construction in Nevada. After the factory tour in Fremont, Baird’s Kallo returned believing that battery cost is already just 1 / 2 of the average and are falling more quickly than most estimates. “This will allow Tesla to create the Model 3 with healthy margins, and also to purchase vehicle aesthetics and performance, placing it above competing vehicles,” he wrote in a note to investors on March 14. He upgraded his rating around the stock to “outperform” his price target to US$300. The stock rose 3.8 per cent right now to US$215.47 on Monday morning.
Lessons From the Model X
Tesla’s luxury SUV, the Model X, has seen long delays and a slow roll-out due to several engineering choices, including complex vertically opening “falcon wing” doors, mono-post rear seats, and the largest piece of windshield glass in the industry. All three analysts noted seeing the Model X in production lines, but nonetheless in a relatively slow rate compared with the Model S. Albertine counted roughly five or six Model S sedans in production for every Model X.
Wheeler, Tesla’s new CFO, assured the analysts that lessons have been learned. It appears, wrote Galves, that the engineers at Telsa led the look meetings for the Model X, with insufficient input from the financing, manufacturing, and purchasing departments. Now those groups appear to have the same voice. “Model 3 launch timing and ease of mass production is really a lot more important than it was for that Model X,” Galves wrote. “On the Model 3, management established that there’s a clear concentrate on easy build, on-time launch, and cost.”
Tesla’s capital expenditures figure from 2015 includes focus on its battery factory in Nevada and its rapidly expanding network of charging stations. It doesn’t include vast sums in research and development, a lot of that is going toward the Model 3.
Baird analyst Ben Kallo issued his report March 14. Stifel’s James Albertine issued a report on March 8. Credit Suisse’s Dan Galves issued his on Feb. 28.
