Tesla: The Prestige?

Summary

Discussion of the potential impacts on equity, bond, commodity, capital and asset markets regarding:

Tesla: Production capability, expansion efforts.

Demographics, issues, March automotive sales forecast.

Profits: Valuation, in the end.

The Prestige is a 2006 thriller drama film from Christopher Priest's 1995 World Fantasy Award-winning novel of the same name. The story follows Robert Angier (Hugh Jackman) and Alfred Borden (Christian Bale), rival stage magicians in London at the end of the 19th century. Borden leads Angier to believe that he uses an invention of scientist Nikola Tesla (David Bowie) for his trick, an invention that actually teleports Borden across the stage. Both magicians share a most yummy assistant in common Olivia (Scarlett Johansson). Obsessed with creating the best stage illusion, they engage in competitive one-upmanship with tragic results.

Production Rampup?

A friend asked about Tesla's (NASDAQ:TSLA) production capability. The Fremont ex GM/Toyota Nuumi plant is currently tooled to produce 150K units per year. That doesn't mean they can or will hit that production level. Factory capacity is more than tooling capacity, which is more than actual production.

There are two lines, the old line is being used for one offs and prototypes, the new line has seen substantial upgrading from the old line. On the new line: each eight-hour shift has a rated capacity of 1,000 cars per week; 3 shifts = 3,000 cars per week x 50 weeks = 150K MAX. Two shifts = 100K. Single shift 50K.

Now if Tesla wants to install another line, and have the space and employees, they can invest in a new line (est. $250M) and double the rated capacity to 300K at full throttle. Or Tesla can start humping the old line and pay an efficiency premium. Tesla has many other issues to deal with to add a line and achieve a 300K number, much less running full tilt boogey with one line to hit 150K.

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