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Tesla Motors Is Going to Need More Factories

Tesla paid pennies on the dollar for its Fremont factory. Image source: Tesla.

It seems that the market doesn't have a lot of faith right now in Tesla's (NASDAQ:TSLA) incredibly aggressive plan to ramp production to 500,000 vehicles per year by 2018 -- accelerated from the initial target of 2020. The company then expects that production can approach 1 million vehicles per year by 2020.

The electric-auto maker will eventually need more factories.

It's a fire! ... sale.
In no uncertain terms, Tesla got incredibly lucky in the wake of the financial crisis. Not only to barely survive a time period when the auto market was imploding, but also because it was able to score an incredible deal on its Fremont factory that General Motors and Toyota were unloading at a bargain price.

GM was in the process of unloading assets as part of its Chapter 11 bankruptcy restructuring. Tesla paid a mere $42 million for the 5.3 million square foot facility in 2010, while also purchasing discounted parts and other gear from GM and Toyota. The Fremont factory had previously produced upwards of 500,000 cars per year.

Tesla CEO Elon Musk thinks it would even be possible to push the limit of the Fremont factory and produce 1 million cars per year there, while acknowledging that it's probably a bad idea. From the recent earnings call:

I think it is actually feasible, maybe not advisable, but...


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