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- How much of the NUMMI plant will Tesla use?
Nearly a month ago Tesla and Toyota revealed a plan where Tesla would buy the recently shuttered NUMMI plant and Toyota would join Daimler in part ownership of Tesla. The NUMMI plant was formerly a joint venture between Toyota and General Motors, but General Motors left the JV last year and then Toyota decided to close the plant with a last day of operation in April 2010. One big question we were left with from the announcement was, what Tesla would be doing with such a large factory (5 million square feet, and a production capacity of up to 500,000 vehicles per year) when their plans have always been a more modest 20,000 Model S vehicles per year. This week Tesla’s VP of Manufacturing, Gilbert Passin, made a blog post describing their intended production processes, but did not answer this larger question.
The blog post describes a production flow that Mr. Passin (25+ yrs experience in automobile manufacturing) says is commonly used by automobile manufacturers. The stages include stamping parts from aluminum sheets, various sub-assemblies like doors, building the car frame, painting, final assembly, and quality assurance. However every step is described as having innovations to reduce environmental impact such as using powder coating rather than liquid paint. Liquid paint contains volatile organic compounds (VOC’s) which evaporate into the atmosphere while powder coating does not. The use of stamped aluminum is said to save half the weight which helps improve overall vehicle efficiency.
The only answer we have for what Tesla would do with such a large facility is in the documents for Tesla’s upcoming IPO. The documents describe the purchase they intend to make and some of the plans.
The purchase is for 207 acres which is 55% of the land on the NUMMI site, and does include all of the manufacturing facilities. The site includes a large section of land that went unused and is a large empty lot, presumably that unused land is the part Tesla is not purchasing and will be sold to a different purchaser. Tesla’s purchase price is $42 million for the land and buildings but no manufacturing equipment. The agreement will terminate if they fail to close the purchase by the end of 2010. NUMMI has agreed to be responsible for paying up to $15 million in remediation costs on the environmental contamination that is known to be on the site. The agreement is also subject to a due diligence period which is to be finished by July 10, 2010.
In the IPO documents, Tesla claims to have reservations for 2,200 Model S vehicles but does not discuss expected production volume. The documents show that under the DOE’s Advanced Technology Vehicles Manufacturing Incentive Program “an aggregate principal amount of $363.9 million will be made available” to Tesla for development of and building out the production facility for the Model S. They also have an agreement with the California Alternative Energy and Advanced Transportation Financing Authority exempting them from paying sales and use tax on up to $320 million worth of manufacturing equipment, and is eligible only for equipment used to build a manufacturing facility in California.
Tesla is beginning to line up the assets required to begin production of the Model S, which they expect to begin in 2012. They have an experienced VP of manufacturing, they have agreements with both Toyota and Daimler giving them access to parts catalogs, they appear to be on track to purchase a large factory site, and have a lot of money lined up to help pay for building the factory. What’s still not clear is the purpose for purchasing such a large factory site.
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For more info:
AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT, Tesla Motors
The Tesla Factory: Birthplace of the Model S