Blog Tesla to Reduce Production of Model S, Model X

Tesla will reduce production of the Model S and Model X, according to a report from Bloomberg.

“Tesla has set substantially lower daily production targets for the Model S and Model X, according to current and dismissed employees who asked not to be identified discussing plans that aren’t public,” Bloomberg reported.

A Tesla spokeswoman told the outlet that the reduction is related to the removal of entry-level versions of the Model S and Model X starting Jan. 14.

“We recently announced that we are no longer taking orders for the 75 kWh version of Model S and X in order to streamline production and provide even more differentiation with Model 3,” Tesla said in an emailed statement to Bloomberg. “As a result of this change and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.”

Tesla built 61,394 Model 3 sedans in the fourth quarter, and a total of 25,161 Model S and Model Xs.

The news comes days after Tesla announced layoffs impacting 7 percent of its workforce. Chief Executive Elon Musk said the cuts are needed to bring down costs to make the cars more affordable. The company also feels profitability will be threatened as the lower-priced Model 3 comes to market.

 

[Barklikeadog]

It is interesting because the conventional wisdom was that the layoffs were comprised of Model 3 ramp up people who were no longer needed, and various non production/non service employees.

Turns out the Model 3 is getting a few more people, and the X and S production is getting cut.

The report later this month will be interesting. What comes next for the Model 3? If they can build 10k a month, that is great when you
have a waiting list. What happens when that waiting list dwindles? Will they continue to get 10k orders per week? Is that what is coming
in now?

 

[Rogstar]

Have you considered that the cut in S/X production may allow transfer of factory space, machinary and personal to model 3 production?
Also (again!) The waiting list doesn't just apply to the home market!
The are plenty of customers elsewhere.

 

[john85775]

My theory: Margins on S/X + reduction in US tax credit + transition of S/X to 3-style drivetrain, combined with demand for Standard Range 3

 

[Cheburashka]

Margins on S/X should be crazy high considering they had 8 years to figure it out!

 

[HankLloydRight]

What happens when that waiting list dwindles? Will they continue to get 10k orders per week?

Who knows? But there is constant demand for new, affordable cars . As people who weren't on the waiting list have cars that start to age-out and are looking for replacements, many will turn to Model 3 as a viable alternative over ICE, assuming the lower (lowest?) price Model 3 is available when the waiting list runs out. So I don't know if that's 10k per week or not, probably not that high.

 

[sandpiper]

Margins on S/X should be crazy high considering they had 8 years to figure it out!

Yes and no. You can do a lot with incremental improvements but hit diminishing returns. Without a major change in design you can't implement many of the lessons learned. The next S will be higher margin for sure.

 

[Jeff Hudson]

The recent reduction in force makes a little more sense now with the addition of this information. I would add that Tesla still has a redesigned Model S and X to reveal during the next year or two so this makes sense from that perspective as well.

 

[Vulcan]

Yes and no. You can do a lot with incremental improvements but hit diminishing returns. Without a major change in design you can't implement many of the lessons learned. The next S will be higher margin for sure.

I saw an article yesterday where people laid off were interviewed. In a long interview, was the comment by one individual that "absolutely no one is working on an S or X refresh".

 

[MIT_S60]

Given the 75 battery for the S/X was discontinued and the substantial increase in the base price for these vehicles, I thought production cuts would accompany pretty quickly.

 

[sandpiper]

I saw an article yesterday where people laid off were interviewed. In a long interview, was the comment by one individual that "absolutely no one is working on an S or X refresh".

I would take this with large grains of salt. If the interview was with somebody from the line, then they are likely talking about them and their co-workers. And yes, those people will have nothing to do with work being done on a refresh.

If we're assuming a re-tool in early summer, as timing seems to suggest, then it's still all with the manufacturing engineers. Tooling, machinery and automation is on order, dies are being tested. And since we're talking a minor refresh, many aspects of the line will not be changing much if at all. And the manufacturing engineers are undoubtedly have NDAs up the wazoo.

 

[MHarrigan]

As the owner of one of the last RWD Model S 75 vehicles produced, I am sad to see Tesla discontinue the "low-end" Model S/X. I understand that they are trying to boost Model 3 sales by doing this, but the Model S/X 75 fills a unique gap in the product line that cannot be filled by the Model 3. They are bigger, have more powerful motors (induction vs permanent magnet) and are well sorted out. I wouldn't be surprised to see Tesla bring back a low-end version of the S/X in the future due to market demand.

 

[darxsys]

As the owner of one of the last RWD Model S 75 vehicles produced, I am sad to see Tesla discontinue the "low-end" Model S/X. I understand that they are trying to boost Model 3 sales by doing this, but the Model S/X 75 fills a unique gap in the product line that cannot be filled by the Model 3. They are bigger, have more powerful motors (induction vs permanent magnet) and are well sorted out. I wouldn't be surprised to see Tesla bring back a low-end version of the S/X in the future due to market demand.

I absolutely agree. I would never buy a Model 3 in its current form and I am sure there are people out there that think the same (obviously much less people than those that want a Model 3), but I am also not willing to pay over $100k for a 100D so its either pre-owned at this point or nothing.

 

[sandpiper]

I absolutely agree. I would never buy a Model 3 in its current form and I am sure there are people out there that think the same (obviously much less people than those that want a Model 3), but I am also not willing to pay over $100k for a 100D so its either pre-owned at this point or nothing.

It will be back. Guaranteed. Maybe it won't be 75; likely 85 or something.

 

[electricar]

I certainly hope so because I have no need for a bigger battery than my Model S75D and liked features that are only on the Model S. I doubt that I am alone and that there are lots of other people who wouldn't have bought a Tesla at all given the current Model line-up.

 

[Vitold]

I believe the former Tesla worker -s and x refresh is not going to happen at Fremont.

 

[sandpiper]

I believe the former Tesla worker -s and x refresh is not going to happen at Fremont.

Battery production likely won't be there, but vehicle production certainly will. It's absurd to think that it would be elsewhere. A lot of equipment is shared between the X and S.

 

[GSP]

It will be back. Guaranteed. Maybe it won't be 75; likely 85 or something.

I think 100 will be the new 75.

I guess we will see if true or not.

GSP

 

[Magellan55]

Combination of Model 3's becoming available worldwide, new EV competitors entering the market this year, and dropping of the more affordable S/X all lead to a reduction in worldwide demand for S/X. It just makes sense that production volume needs to drop as well. It will also free up more shifts in the paint booth and the giant presses for Model 3 at Fremont, so they can get past that 4700/wk plateau they've been on for months.

 

[Tic-tac-toe]

The S P100D is the fastest car in 0 to 60 acceleration of any production car currently at 2.3 secs. Beats all Lambos, Ferraris, McLaren, Porsche, etc These cars may have higher top speeds but at legal velocities, the S P100D rules. Car does not need any (performance) upgrades. Pricewise, it’s a bargain when compared to similarly (slower) performing super/hypercars.

Unfortunately, the market for 130k + performance cars isn’t big. Tesla is being perfectly reasonable to put most of their resources to the mass market 3 and Y if it wants to survive and no longer be a niche auto company.