There have been a few times at Tesla where the entire company was on the line and its future hinged on a single project.
The most recent was the Model 3, but now CEO Elon Musk says that it is the last project on which he is betting the future of the company.
It’s not to say that Tesla will not start other vehicle programs as ambitious as the Model 3 was, but it will not involve increasing their overall production by such a magnitude like it did when they went from the Roadster to the Model S or from the Model S and Model X to the Model 3
Musk explained his logic in an interview with Bloomberg:
“There have been three situations where it was necessary to bet the company. Like it was unavoidable to bet the company. The creation of the Roadster. Obviously, we’re a brand-new company, it’s our only product. From the Model S, we went from like 600 cars a year to 20,000 cars a year and a much more sophisticated car. Obviously, that was a bet-the-company situation.
Model X was painful but not a bet-the-company situation. Model 3, we’re going from, you know—like the S or the X program is 1,000 cars a week. Model 3, even to basically be healthy for the Model 3 system, it’s 5,000 cars a week. So it’s a half order of magnitude increase relative to the S or the X. That is necessarily a bet-the-company decision. You cannot have that much of a step change for a manufacturing company without this being a bet-the-company decision.
Tesla has now achieved a Model 3 production of 5,000 cars per week, but Musk confirmed that it is only sustainable with a lot of effort.
It should be easily sustainable in about a month, which is why Musk says Tesla will be out of ‘production hell’ in a month.
The CEO says that Tesla’s future project won’t represent that big of a manufacturing leap:
But I do not see us doing another thing where we go five times bigger. Once we break through to mass market cars, where mass market is on the order of a quarter million vehicles per year, I cannot see us doing a 1.2 million-vehicle program of one particular model.
Basically, I believe Model 3 is the last bet-the-company situation. It’s not like [I have] a desire to bet the company. There is not a choice. If somebody knows how to do it without betting the company, I would love to talk to that person. But I do not foresee future bet-the-company situations.
To the best of my judgment, I do not think we have any future bet-the-company situations. We will still need to work hard and be vigilant and not be complacent because it is very difficult just to survive as a car company. But it will not be the same level of strain as getting to volume production of Model 3.”
That’s despite Tesla having several major vehicle programs in the work, like the new Roadster, Tesla Semi, and Model Y.
For example, Musk previously mentioned that he could see a bigger demand for the Model Y than the Model 3, but even then it would require that big of an increase in manufacturing capacity in comparison to Tesla’s current capacity.
Musk also confirmed that they are almost done with the design of the Model Y and they still aim for an unveiling in March 2019.
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