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Think Tesla EVs Are Fast? Check out Their Ludicrous Production Ramp-up Plan

Tesla Motors Inc (TSLA) Factory Freemont, California

Tesla Motors Inc makes electric cars that go fast.  Really fast.  In Ludicrous Mode the Model S luxury sedan can reach 60mph in only 2.8 seconds.  The same is true for the Tesla Model X, a family SUV akin to the mini-van only much cooler and much more expensive.  Tesla is a company known for speed but it’s also a company with a reputation for being late.  When CEO Elon Musk tells the world that he believes his firm can build 500,000 cars by 2018 and 1,000,000 by 2020, many of us who have been following the history of Tesla find it a little hard to believe.  That’s a FAST ramp up. Really fast.  Elon Musk sure loves speed!

Tesla Motors Inc (TSLA) Factory Freemont, California

Here are two things that are particularly striking about the current state of affairs at Tesla.

  1. Tesla wants to build 1 million cars by 2020

The first thing that caught my attention is Elon Musk’s wildly aggressive production target, which goes against everything the firm has been saying and doing in the recent past. Tesla Motors said it planned to sell 500,000 cars by 2020 and Wall Street is still trying to fathom out how the firm will achieve that feat.

Tesla delivered 50,000 cars last year, it plans to deliver between 80,000 and 90,000 cars this year, it has already missed Q1 delivery estimates of 16,000 vehicles, and 500,000 cars by 2020 doesn’t sound realistic because the firm is notorious for delays. However, Elon Musk has revealed that he wants to put 500,000 cars on the road by 2018 instead of 2020 in order to meet up with the demand for its mass-market Model 3.

Musk also says he is not stopping at 500,000 cars by 2018 but that he hopes to deliver 1,000,000 cars by 2020. If Tesla is able to pull of the feat of delivering 500,000 cars by 2018, we can reasonably expect the firm to pull off 1M cars by 2020. And no, Tesla isn’t building cars to just to meet up with lofty targets, Musk says, “Tesla is going to be hellbent on becoming the best manufacturer on Earth”.

  1. Top senior executives are leaving Tesla

The second thing that strikes me as strange is the departure of two key senior executives that the firm announced. It was reported that Josh Ensign, vice president of manufacturing and Greg Reichow, vice president of production are both leaving the firm. CEO Elon Musk has watered down the exit of these two men but I can’t seem to get the thought that there’s more to the story of their exit out of my head.

To start with, Musk admitted that Reichow and the team that worked with him “deserve a lot of credit for building an all-new manufacturing organization from the ground up and for making Model S and Model X a reality.”

The question I ask then is why is Reichow leaving if he is truly important to Tesla Motors . There are only two possible explanations – Reichow might be leaving if he was held accountable for some of the issues that plagued the Model X, he could also be leaving if he’s not sure about the direction of the firm with the Model 3. Whatever action Reichow takes after now (especially if and where he gets a new job) could provide insight into the untold story about his exit.

Nonetheless, Elon Musk has said noted that Reichow will phase out his exit with a leave of absence “so that he can have a well-earned break” and would remain at the company “as long as necessary until his successor is on board.” He also assures investors that Reichow will not be missed because “We’re confident that with the strength of the team, high-quality manufacturing at Tesla will continue”.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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