Elon Musk’s Tesla Motors (NASDAQ: TSLA) might be capable of building one million electric cars a year.
New construction at Tesla’s factory in Freemont, California, (across the bay from San Francisco) might add enough capacity to the facility produce up to one million vehicles a year, Analyst Trip Chowdhry of Global Equities Research told Barron’s. The factory is currently capable of producing 500,000 autos a year.
If Chowdry’s projections are true just one Tesla factory might be capable of producing almost twice as many electric vehicles as were produced in the entire world in 2015. Around 540,000 plugin and hybrid electric vehicles were built worldwide in 2015, Clean Technica reported.
Interestingly enough the Tesla factory in Freemont is hardly new. It began life in 1962 as a General Motors (NYSE: GM) plant called Freemont Assembly. Freemont Assembly operated for 20 years and closed in 1982.
That factory became New United Motor Manufacturing Inc.; a joint venture between GM and Toyota Motors (NYSE: TM), in 1984 which lasted until 2010. At its height in the 1980s NUMI produced 6,000 cars a week, mostly Corollas.
If you were wondering the Tesla Factory is located in the East Industrial area of Fremont; between Interstate 880 and Interstate 680. Production at the Tesla Factory is currently around 20,000 vehicles a year.
Tesla would Produce One Fourth of America’s Autos in Musk Plans
If Musk can pull off this feat Tesla would be producing more cars than the entire nation of Canada, where 888,565 cars were built in 2015 according to the automobile trade manufacturers’ group OICA.
It would also mean that Tesla would be capable of producing one fourth of the cars built in the United States. Around 4.164 million cars were built in the United States in 2015. Total U.S. vehicle production was around 7.9 million vehicles last year, OICA data indicates. That number includes all class of auto including vans, pickups, and SUVs.
Interestingly enough there might not be a market for all those cars. Demand for cars in the United States is falling, one auto maker Fiat Chrysler Automotive (NYSE: FCAU) has decided to stop building cars in the USA. Another Ford (NYSE: F) is shifting all of its small car production to Mexico as Donald Trump recently pointed out.
That means Tesla might have to start building other vehicles like vans or pick up trucks if it wants to make a profit. It will also face lots competition, Ford is planning to bring out 13 models of electric by 2020. Volkswagen wants to build two to three million all-electric vehicles by 2025.
One has to wonder if there will be enough demand for all those electric vehicles. It is also not clear if there is enough demand in the US auto market for another major manufacturer.
Perhaps Musk will have to use his factory for something else such as solar electric systems for Solar City which he plans to fold into Tesla, vehicles or components for the Hyperloop or components for his Mars Colony.