Tesla is on track not only to churn out 5,000 Model 3s per week, but could even ramp production up to 8,000 with little impact on its spending.
“Tesla seems well on the way to achieving a steady weekly production rate of 5,000 to 6,000 units per week,” Evercore ISI analyst George Galliers said in a note following an inside tour of the company’s facilities.
“We are incrementally positive on Tesla following our visit. We have confidence in their production. We did not see anything to suggest that Model 3 cannot reach 6,000 units per week, and 7,000 to 8,000 with very little incremental capital expenditure.”
The numbers appear so good, Galliers said, that the brokerage’s current Model 3 production estimates for the second half of the year may be as much as 7 percent too low.
In a note entitled “Just Got Back from Tesla…,” the team of Evercore analysts detailed what they considered a number of optimistic signs at the company’s Fremont, California facility. Among the operations the analysts visited, the team was most impressed with Tesla’s general assembly and stamping segments, which “met or exceeded all the benchmarks which [they] had been for.”
A major component of the production process, stamping involves the molding of sheet metal into auto parts.
“From what we saw, it appeared that Tesla’s Model 3 press is able to run two parts together (both right and left door),” Galliers explained. “While we were unable to determine hits per hour, when we asked an engineer, the response was a confident ‘we’re not telling you that but plenty.’ Stamping seemingly has the capacity and capability to support all Model 3 targets and potentially future vehicle models as well.”
The analyst also commented on what’s become known as “The Tent” at Tesla, a new assembly line sheltered under a tent in the company’s parking lot.
In its race to both drive cash flow and pacify increasingly irate bondholders, the company quickly added the second assembly line, officially known as General Assembly 4. Musk has since confirmed that the line was making all of the high-spec Model 3s.
The upbeat comments from Galliers come amid a growing cloud for Tesla chief executive Elon Musk, who recently tweeted that he would be privatizing the electric automaker at $420 per share.
“Focusing on the fundamentals and setting aside talk of privatization, we are incrementally positive on Tesla following our visit,” the analyst said in the note Thursday.