Tesla to cut costs at old NUMMI plant to make profit

Article by Christian A., on April 16, 2012

Tesla Motors Inc. is conducting a survey on a 50-year-old factory in Fremont, Calif., where it intends to produce electric cars, according to Gilbert Passin, its vice president of manufacturing. Passin is expecting to get a manufacturing bargain. Passin, who formerly served as an engineer for Toyota Motor Corp., Volvo AB's Mack truck unit and Renault SA had designed this second-hand plant.

He filled the plant with Ikea furniture and refurbished machinery to produce battery-powered cars that could rival BMW's 5 Series, beginning in about two months. He asserted that the cost to setting it up was “very, very low” if you compare it to a new plant. He added that it has a “very good” value return.

Preventing costs from ballooning is vital to Tesla’s success because no matter how many consumers prefer environmentally friendly vehicles, the rechargeable vehicle still can’t be economically viable if it can’t be competitive with conventional models on price. Tesla, which is being led by Silicon Valley entrepreneur Elon Musk, has yet to turn a profit.

Since the going price to construct and set up a North American auto plant is estimated to be about $1 billion on average, Tesla may have released less than a third of that figure to purchase, renovate and equip its factory.

Passin said that in 2010, it had paid $42 million for the plant and then used up $17 million for a portion of its presses and machinery. And at a fraction of the cost, it got other used equipment from parts suppliers such as Tower Automotive Inc.

Last February, Tesla released 2011 financial results, where it revealed that its present business plan would offer sufficient liquidity to be profitable in 2013. In 1962, this plant opened and started to build Oldsmobiles, Buicks, Pontiacs and Chevrolets for the former General Motors Corp. [source: Bloomberg]

If you liked the article, share on:

Comments

Recommended

Kia is taking things a step further with the new Kia Stinger, which they first introduced at the 2017 Detroit Auto Show. With the specs given to us by the...
by - June 25, 2017
Earlier this week, Nissan revealed a teaser of the new 2018 LEAF’s interior, giving us an idea of what the electric vehicle has to offer. The company released a video...
by - June 25, 2017
The primary suggestion of a 4x4 ute from French company Peugeot was first revealed in 2016. Fifteen months later, the production version is launched. Now, Peugeot is not shying away...
by - June 24, 2017
The new Jaguar E-Pace crossover will soon hold its official launch on July 13 and is expected to arrive at the showrooms by early next year. It couldn’t have come...
by - June 24, 2017
As prices of the original Shelby Cobra have skyrocketed into astronomical proportions, there are firms like Superformance that serve replicas to consumers who demand the same levels of performance at...
by - June 24, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries