Tesla achieved record levels of Model S production, deliveries, and vehicle gross margins this quarter. Chairman and CEO Elon Musk said there is a huge untapped demand in the U.S., demand is growing in Europe, and Tesla will begin taking reservations in China’s massive market this quarter.
But demand isn’t Tesla’s challenge — it is scaling production to meet demand.
“We are production constrained, not demand constrained,” Musk said during an earnings call. “We are working hard to address the production constraints and improve, but the thing people still don’t quite get is we are different in a fundamental way from other car companies. It doesn’t make sense to do things to amplify demand if can’t meet that demand with production. We are spending our time to figure out how to ramp up production faster and maintain good quality.”
There are over 19,000 Model S cars on the roads who have collectively driven their cars more than 100 million miles.
Tesla is currently producing 550 cars per week and aims to produce 20,000 cars a year. However it won’t be able to up this volume unless the company makes some serious investments in infrastructure and faculties. The critical constraint for the production of these vehicles is lithium-ion battery cells. Panasonic is Tesla’s current partner for producing electric-car batteries, but Reuters reported that Tesla is in discussions with Samsung SDI to be a second battery supplier.
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