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Tesla Reaches 20,000 Unit Production Rate Annually for Model S

Tesla keeps proving the skeptics wrong. For years we’ve heard all kinds of arguments explaining why they couldn’t possibly succeed, and why they wouldn’t deliver what they promised, how the auto industry was too hard to break into, etc. From the first promo pics of the Tesla Roadster in July 2006 to now, every time Tesla hits a new milestone, the naysayers go something like: “Well, they did this thing, but they won’t get to this next thing.” So I’ll be curious to see what they’ll come up with now that its been revealed that Tesla’s factory has now reached its goal of producing Model S electric sedans at a rate of 20,000 a year, or 400 a week.

This is a big deal because economies of scale; that is, the more you make of something, the less it costs you per unit because you can amortize your fixed costs over more products and you have more bargaining power with your suppliers. This is a big part of Tesla’s strategy. It’ll also help clear their backlog of orders, which have piled up to around 13,000-15,000, and promise faster deliveries to new customers (some people might be deciding against the Model S because of the long waiting lists).


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