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Tesla's new Lathrop, CA facility

Discussion in 'TSLA Investor Discussions' started by DaveT, Apr 22, 2014.

  1. DaveT

    DaveT Searcher of green pastures

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    This was brought up by Theshadows and briefly discussed in the ST movements thread (Short-Term TSLA Price Movements - 2014 - Page 354), but I'm starting a new thread because I think this is a significant development and worth discussing its implications more thoroughly.

    Here's what we know.

    1. Tesla appears to have started renovations on a 431,000 sqft facility in Lathrop, CA (near Manteca/Stockton area)
    The main articles is http://www.mantecabulletin.com/m/section/1/article/103892/ . Here are some notable sections:
    "The city confirmed on Monday that Tesla Motors – the Palo Alto-based company responsible for a direct manufacturer-to-buyer approach to car sales and a reimagining of what electric cars can be – has taken out permits and started renovations on the 431,000-square-foot vacant Daimler-Chrysler distribution facility that faces Interstate 5."

    "According to City Manager Steve Salvatore, the permits were for “manufacturing modifications” and that work has already begun on overhauling the existing facility."

    "Information about the number of jobs that the facility would create and exactly which part of the manufacturing process – the company makes vehicles as well as electric vehicle powertrain components for other automotive companies – would be in Lathrop there was not immediately available through a communications agent for the company."

    "Daimler Chrysler’s Mopar distribution facility – which sent Chrysler, Dodge, Jeep and Ram and at that time Mercedes Benz components to warehouses, parts distributors and auto dealerships around the West Coast – was one of the anchor components of the Crossroads Commerce Center. The building has sat vacant since 2009 when Chrysler combined its small parts distribution in Los Angeles and Portland."

    "The 29-acre complex at 18260 Harlan Road where Tesla is locating can accommodate a 125,000-square-foot expansion."

    "Chrysler’s Mopar parts division originally planned on 225 people for the Lathrop facility when it opened in 2001. That’s because the plan at the time was to merge Chrysler with Mercedes Benz. But when that union went south, the distribution center that is large enough to accommodate nine football fields became surplus capacity. Chrysler never utilized more than 50 percent of the space. There were 45 employees at Lathrop when the distribution center closed in 2009."


    2. Tesla is recruiting people mainly for CNC positions for the Lathrop facility.

    According to Tesla's Career page (Careers | Tesla Motors and search for Lathrop under location), Tesla is currently recruiting 32 positions for the Lathrop facility:
    CNC Equipment Engineering Technician - Lathrop CA (14 positions) - job description as of 4/22/14
    CNC Supervisor - Lathrop CA (3 positions) - job description as of 4/22/14
    IT Manufacturing Support (1 position) - job description as of 4/22/14
    Machining Set Up Technician (6 positions) - job description as of 4/22/14
    Maintenance Spares Planner - Lathrop CA (1 position) - job description as of 4/22/14
    Manufacturing Training Coordinator (1 position) - job description as of 4/22/14
    Mechanical Engineer/Machining - Lathrop CA (3 positions) - job description as of 4/22/14
    Robotics and Controls/CNC Engineer - Lathrop CA (3 positions) - job description as of 4/22/14


    3. In Tesla's job descriptions for the Lathrop facility, we find some more clues.

    a. There will be a manufacturing line.
    "Perform process sustaining for the CNC manufacturing line in Lathrop, CA." (CNC Equipment Engineering Technician)
    "We are looking for a highly motivated individual to support manufacturing training needs and build a strong and capable work station trainers team. The Manufacturing Training Specialist will be responsible for ensuring that new and current employees are trained per the Tesla 5-Star Training and Certification System. Manage the implementation, administration and maintenance of the training matrix." (Manufacturing Training Specialist, Machining (CNC)

    b. This will be a machining factory.
    "We are looking for a Mechanical Engineer/Machinist to join our Equipment Engineering team for our CNC Machining factory in Lathrop, CA." (Mechanical Engineer/Machining)
    "We are looking for a Robotics and Controls Engineer to join our Equipment Engineering team for our CNC Machining factory in Lathrop, CA." (Robotics and Controls/CNC Engineer)

    c. 2 shifts are planned.
    "The Production Associate is a member of the Manufacturing Production Team. Location is Lathrop CA. CNC Operator for 12:00 to 12:00 shift . This is a 3 day / 4 day work shift (Sunday, Monday Tuesday or every other Wednesday, OR, Thursday, Friday Saturday and every other Wednesday). He/she will participate in the development and application of Tesla’s Production System for CNC Machining of the Tesla Model S." (CNC Supervisor)


    Here are some observations and questions I'd like to pose for discussion:

    1. Why now?
    Tesla is recruiting and filling positions now. This likely means that the manufacturing line at Lathrop will go into production sooner than later. What's the rush?

    2. What will they be manufacturing?
    There appears to be a lot of CNC positions. CNC machines cut and shape metals. But most of the body is stamped/pressed at the Fremont factory. So, it would appear that they would be manufacturing some non-body metal parts, perhaps the motor or inverter or parts of the powertrain.

    3. Why can't they use existing space at the Fremont factory?
    The Fremont factory still has a lot of non-used space. So, the question is why would Tesla expand into another facility (albeit much smaller) to expand manufacturing?

    4. Does the Lathrop facility have any connection to the Gigafactory?
    If Tesla chooses Reno as the gigafactory location, then Lathrop does sit somewhere in between the Gigafactory and the Fremont factory. However, the Gigafactory won't be up and running for another few years and Tesla is already recruiting positions in Lathrop.

    5. All in all, it seems like a bold, bullish move by Tesla.
     
  2. Jonathan Hewitt

    Jonathan Hewitt Active Member

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    1,3. I'm going with a simple answer for my guess. They could have done it at Fremont but I bet they got a good deal on this new place? Snap it up while it's a good deal and rather than shift operations from Fremont to this new place that will eventually end up there anyway just go ahead and use it now. They're going to need it eventually anyway.
     
  3. Cobos

    Cobos S60 owner since 2013

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    As I mentioned in the other thread could this be some sort of prototype or testing facility for the full production line at the gigafactory, hence the rush to get started now to have a ready setup when the facilities at the gigafactory is ready.
    This site was probably dirt cheap as it had been vacant the last 5 years.

    The motor I beleive at some point was not made at the Freemont facility but somewhere else when they were building the Roadsters, was that later moved to Freemont? If not it makes sense they now need so many motors that they have grown that out of their old facility?

    It seems like this facility is not close enough or big enough to make complete sense?

    Cobos
     
  4. mrdoubleb

    mrdoubleb Active Member

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    They could be making SCs here... Just a WAG.
     
  5. Johan

    Johan Took a TSLA bear test. Came back negative.

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    My uneducated guess would be that with so much focus on CNC machining this site would not be even a prototype facility for cell production. That would not require advanced machining. So must be other components. Motors sounds like a good guess?
     
  6. c041v

    c041v Member

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    I am constantly impressed with Tesla/SpaceX's ability to snap up properties that would undoubtedly cost many times more to build from scratch. (Freemont Factory, Pad 39A, Hawthorne 747 Factory and now the Lathrop Facility) I'm actually very surprised the Gigafactory is being planned as a scratch build endeavour and that they couldn't locate some semi-suitable vacant factory in one of the proposed states. Perhaps the level of customization is too dissimailr from a standard factory?

    Anyways, My guess is Model X drivetrain and/or unique bits. Front motor or various AWD components, maybe Falcon hinges. There must be some high level advantages (Rail access?) to using Freemont for complete vehicle assembly and production only, whereas individual components could be more easily transported by truck to the main factory like other components. The other reason for this guess is the timing, it will take this place a few months to get up and running, which coincides somewhat with the Model X release. I can't recall if Elon said in the last CC that the X would be on a separate line?

    I can't see it being a place for spares as; a) The factory should be able to produce such parts already, and more efficiently. b) Why start mass producing spares now, after 30k+ cars on the road? I haven't seen any reports of certain parts suffering from premature wear/fatigue to the point that they'd need a 125,000 sqft facility to produce spares.

    It would be really cool if this was a Quattro GmBH/AMG/M Division building that cranked out performance parts, but I think that is extremely unlikely.
     
  7. SFOTurtle

    SFOTurtle Active Member

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    As reported in another thread, this also figures to be a very good spot for a Supercharger. One would think it could be rolled out on the premises with little effort.
     
  8. hockeythug

    hockeythug Active Member

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    Do we know when they bought it? Q1?
     
  9. Subhuman

    Subhuman Member

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    Currently it appears that the building in Lathrop does not have a rail spur however it appears that it would not be to difficult to add one as tracks run along the backside of the building. I have verified that this is the same rail line that runs through Reno, NV and to the Freemont factory. Coincidence? Maybe.
     
  10. surfside

    surfside Member

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    given some the challenges that tesla had with the model s related to having suppliers ramp up to meet tesla's production goals, it wouldn't surprise me at all if tesla made a decision to make more parts internally to have better control over their supply chain. i view this as a wise decision on tesla's part.

    surfside
     
  11. J in MN

    J in MN S60 P12635

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    +1 Seems pretty obvious.
     
  12. markb1

    markb1 Active Member

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    This location is only about 10 miles or so from the Port of Stockton.
     
  13. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    Given they'd only make a few hundred, that wouldn't be it.
     
  14. farzyness

    farzyness Food lover. Entrepreneur. Did I say food lover?

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    How about a facility where the Hyperloop will be built?

    I kid. Maybe.
     
  15. DrDave

    DrDave Member

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    This.

    For already internally supplied parts though that are causing constraint, and would more so as production tries to ramp up.
     
  16. DaveT

    DaveT Searcher of green pastures

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    One thought. Tesla could be starting a new strategy where they open up various part manufacturing facilities around the country and world. These facilities would be much smaller than gigafactories or car assembly manufacturing plants like Fremont. The parts factories would each focus on different parts that Tesla insources, like motor, inverter, etc. They could start with the high margin parts first and as they grow they can insource more and more parts of the car.

    My guess is that previously Tesla had started manufacturing some of these parts at Fremont (ie, motor) and they could have continued but since they are headed in the direction of various parts facilities then they might have figured to do it sooner than later. Also probably they bought the Lathrop facility for an unbelievably cheap price and that made the decision even easier. Just speculation.
     
  17. austinEV

    austinEV Active Member

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    -1 on the SC manufacturing facility theory. I can't think of a lot of machined metal parts. It is sheet metal boxes I think. Plus it wouldn't be high volume unless they are actually doing the third party SC sales thing, but that seems a few years too early for that.

    I think the simplest answer must be right: It was cheap, and they had a reason to not use unused space at fremont. i think we give too much credit to the infinite re-useability of that space. They might have loads of some kind of space, and not enough of another? So to solve a nagging bottleneck they went out and got the right little factory. Heck, maybe the machines were there. Maybe TM fields calls all day long from people who own dusty factories and just got a crazy good deal that solved some specific little problem that we couldn't understand from 40,000 feet.
     
  18. Student_Forever

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    I agree with the others on the notion that the Lathrop location is most likely for the supply parts. I also view this development as a fundamentally positive one since it directly affects the income statement.


    I like the idea of compartmentalizing production into sub-factories. This strategy could isolate the bottleneck points and provide ad hoc flexibility, i.e. "divide & conquer". For example, if you have a supply shortage for mirrors, you can find substitutes just for mirrors. This way you can assign certain business units / managers to solve those specific problems while the overall production is not compromised. That reduces the chances of production slowdown, which is good for the bottom line.


    From the satellite pictures of Google Map, you can see tracks near the Lathrop location, but those tracks just go through. I could not see a stopping platform even though there is a Home Depot distribution center nearby. To me it suggests that this railroad is dedicated to something else and might not be available for Tesla's shipping purposes at least in the near term.

    If you play around with Google Maps trying to connect Fremont, Lathrop and Reno and switching transportation modes from car to public transportation, then you can see that the train goes only from Reno to Fremont. Lathrop gets dropped out for trains.

    I do realize that the map is showing passenger routes while commercial lines could be different. Still, it's a possible indication that the Lathrop location will be used for auxiliary production that is not related to the battery manufacturing (assuming that batteries are delivered from Reno to Fresno that is).
     
  19. Citizen-T

    Citizen-T Active Member

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    I read somewhere today that the unemployment rate in Lathrop is very high and therefore wages are very low. Sorry I don't have a link, but the author seemed pretty convinced that the location was attractive because it could be staffed with much cheaper labor than hiring those positions in Fremont. I have no idea whether or not these claims are true, just throwing it out there.
     
  20. mrdoubleb

    mrdoubleb Active Member

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    OK, OK, not clinging to the SC factory, said it was just a WAG... but the whole thing just "does not compute" for me. Gen 3 is not for another 3 years, even with the X production line they would still only be using a fraction of the current factory - and they already bought land next to that and we were guessing if they would expand there.

    I hope they will shed some light in the Q1 letter (i think they kind of need to as it's on the books now).

    Interesting. :cool:
     

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