Tesla confirms Model Y production has begun at Austin plant
Tesla began producing vehicles at its $1.1 billion Travis County manufacturing plant late last year, the automaker confirmed Wednesday.
“Model Y builds began in late 2021 at Gigafactory Texas. Following final certification of the Austin-built Model Y, we expect to begin customer deliveries,” the company said in its fourth quarter earnings report.
Tesla, who said in October that he was move its headquarters to Austin, also said its Model Y vehicles in Texas and Berlin are undergoing equipment testing. The Model Y is Tesla’s SUV and is expected to become a key product for the company. Texas also listed several other vehicles – the Cybertruck, Tesla Semi, Roadster and a “future product” – as still in development.
Construction of the Austin area facility has advanced rapidly since Elon Musk, CEO of Tesla announced in July 2020 that it had selected the southeast Travis County site for the facility, which the company dubbed Giga Texas.
Tesla has announced plans to produce its Cybertruck, Semi, Model 3 compact sedan and Model Y vehicles at the Travis County site. Tesla received tax breaks from Travis County and the Del Valle School District worth more than $60 million combined to build the facility. Musk said the facility could eventually employ 10,000 workers.
In Wednesday’s earnings release, Tesla said the pace of production in Austin will pick up in the coming days, and said progress continues on the Cybertruck. This follows a recent report by Reuters news service that the Cybertruck could be delayed until the first quarter of 2023. Musk also revealed this week through a post on social media site Twitter that he was driving a Cybertruck around the facility of the Austin area.
“The pace of production ramps in Austin and Berlin will be influenced by the successful introduction of many new products and manufacturing technologies in new locations, ongoing supply chain challenges and regional permits. We are making progress in the industrialization of Cybertruck, which is currently slated for Austin production after the Model Y,” Tesla said in a note to investors.
Company executives had hinted that the Austin-area plant would begin production in late 2021, and industry analysts had suspected it was approaching or had already reached start-up. Musk also tweeted last month that the factory would be hosting a grand opening party with factory tours in early 2022.
During a call with investors and analysts on Wednesday, Musk said 2021 was a “breakthrough year” for Tesla. Now, he said, the company will focus heavily on its two newest factories.
“After a banner year, we are focused on the future: Texas and Berlin,” Musk said. “It’s worth noting that, as the internet has observed, we’ve made quite a few cars in Texas.”
The Tesla factory in Austin should be centerpiece of the company’s production
Industry analyst Dan Ives of Wedbush Securities said he expects Tesla’s Austin-area facility to be the centerpiece of Tesla production for years to come.
“The Austin production launch is very important for Tesla to expand domestic and global production of Model Ys, which are expected to have a massive year in 2022,” Ives said.
Tesla reported record fourth-quarter and full-year profits, and said it had a record number of vehicle deliveries in 2021. Tesla’s delivery of 936,000 vehicles for the year was nearly double its 2020 numbers In the fourth quarter alone, sales reached 308,600, a new record.
Tesla said it made $5.5 billion last year, compared to $3.47 billion in net income in 2020, marking the third straight year Tesla has been profitable. Of that, Tesla made $2.32 billion in the fourth quarter, at $2.54 per share, beating Wall Street expectations of $2.36 per share.
The company reported revenue of $17.72 billion, which also beat expectations. About $314 million of that revenue came from the sale of regulatory credits to other automakers for meeting government pollution standards.
“There should no longer be any doubt about the viability and profitability of electric vehicles,” the company said.
Austin, along with Tesla’s factory in Berlin, is expected to play a key role in boosting Tesla’s production as demand continues to grow for electric vehicles. Ives predicted the Austin-area facility would begin rolling out cars in early February and the facility would ramp up to full capacity by the fourth quarter of 2022 or early 2023.
Musk said the Model Ys being built in Texas are currently being manufactured with a structural battery and deliveries will begin after final certification, which he said would be “fairly soon.”
However, once those are delivered, at least for now, all Austin-produced cars will have to be removed from the state before being sold to Texans. State law currently prevents automakers from selling directly to consumers, as Tesla does.
Musk also said the Austin-area facility includes offices, with some of those offices overlooking the production line, though he didn’t say if those were headquarters offices.
Tesla said on Wednesday it aims to rapidly ramp up production in part thanks to the two newer factories.
“We believe that competitiveness in the electric vehicle market will be determined by the ability to add capacity through the supply chain and ramp production,” the company said.
“While we battled, and everyone else did, with supply chain challenges throughout the year, we managed to increase our volume by almost 90% last year. “, Musk said. “This level of growth didn’t happen by chance, it’s the result of the ingenuity and hard work of multiple teams across the company.”
Supply chain issues are expected to continue, but on a call with investors, Musk said Austin-based Tesla still expects significant growth above 50% next year.
Musk said Tesla will focus on scaling this year and said no new vehicle models will be launched this year because the introduction of new vehicles will reduce capacity.
Tesla’s non-vehicular products will also be the focus of the company’s attention. Musk said ‘Optimus’, a humanoid robot better known as the Tesla Bot, will be the company’s focus next year, although it’s unclear if these will be produced. in Austin. Musk predicted the robot’s initial use will be in factories moving parts or other similar tasks, and it will also be ready for production next year. He added that the bot business has the potential to be larger than Tesla’s vehicle business over time and hinted that it could help tackle future labor shortages. .
Musk also said the company’s comprehensive self-driving software, which is being tested, will be a profit driver going forward. Tesla Insurance, which is now available in Texas, Illinois, Arizona, California and Ohio, will also be scaled. Company executives said they are “comfortable with what they see in Texas” and see the state as a model to expand to other states this year.
“Something We All Watched”
Amber Gunst, CEO of the Austin Technology Council, said it was exciting to see the facility start production.
“It’s something we’ve all observed,” Gunst said. “The factory is going up and we expect people to be able to start working there and start building and running vehicles, so we’re really excited to see this project moving forward and that this company is here. and provides excellent quality jobs in Central Texas.”
The start of production comes as Austin increasingly becomes the center of Tesla’s business. In October, Musk announced that Tesla was moving its headquarters from California to Austin, but he offered few details at the time. In December, documents filed with the United States Securities and Exchange Commission showed that the company had officially moved its headquarters to the same site as the factory.
Texas and Austin itself are also increasingly important to Musk. In 2020, the billionaire said he moved to Texas to be closer to SpaceX’s gigafactory and facilities in South Texas.
The CEO has also apparently quietly expanded many of his other businesses into central Texas. This includes his tunnel and infrastructure construction company, the Boring Co., which has facilities in Pflugerville and Bastrop; a potential Austin SpaceX office; a potential Neuralink desktop; and the headquarters of his private foundation, the Musk Foundation.