Tesla (TSLA) just crossed a major production milestone, but the leading EV-maker still has a long way to go to meet its ultimate goals and take on the growing competition.
In a tweet yesterday, CEO Elon Musk beamed:
Congrats Giga Shanghai on making millionth car! Total Teslas made now over 3M. pic.twitter.com/2Aee6slCuv
— Elon Musk (@elonmusk) August 14, 2022
It’s an impressive total for the Shanghai factory, one that has been making EVs since the fall of 2019. Musk recently shared that Tesla’s Fremont factory had just produced its two millionth car in July, though Fremont has been building EVs since October of 2010.
Tesla’s march to 3 million vehicles produced all-time from its two main factories coincides with the beginning of the company’s ambitious growth plans.
In its Q2 shareholder letter, Tesla updated its installed annual capacity, or theoretical max production. Tesla said Fremont production capacity expanded to 650,000 vehicles from 600,000 last quarter, and Giga Shanghai’s capacity grew to 750,000 from 450,000. Meanwhile at new factories located in Austin and Berlin Tesla now claimed each factory has an installed capacity for 250,000 vehicles.
The Q2 update noted install capacity increased overall by nearly two-fold, meaning Tesla could theoretically deliver nearly 2 million of its EVs per year — a big jump for a company that delivered 936,000 vehicles in 2021.
Tesla has also stuck by its 50% CAGR (compound annual growth rate) target for annual deliveries, meaning the company will have to deliver around 1.4 to 1.5 million vehicles this year to hit that target. Since it has produced around 564K vehicles thus far in 2022, it has a long way to go in the back half of the year in order to reach its delivery goal.
Looking ahead to 2023, if Tesla maintains its 50% CAGR target it will need to produce 2.1 million to 2.2 million vehicles, which is theoretically possible but would mean all factories working at optimal production, with minimal periods of downtime. Recall just last month Giga Shanghai was shut down for a few weeks for upgrades, after being closed for a few weeks in the spring due to COVID-related shutdowns.
While delivering over 2 million EVs in a year would be impressive, note that from an overall sales point of view Tesla is dwarfed by its traditional automaker rivals. Ford sold 3.9 million vehicles globally in 2021, and GM sold 6.3 million vehicles during the same time, all the while both companies were hamstrung by component and chip shortages.
By 2025 Ford (F) and GM (GM) aim to produce a combined 3 million EVs globally. Though that will be around the same figure Tesla aims to deliver by 2025, it does show that Tesla’s main U.S. rivals are catching up, and fast.
The main question for analysts and investors will be whether Tesla’s head start over its competition will keep it firmly in the driver’s seat well into the back half of this decade. Musk predicted two weeks ago that Tesla will make its 100 millionth vehicle in 10 years time.