Thread by @jpr007

A PRIMER ON UNDERSTANDING CAPACITY IN THE MANUFACTURING SECTOR

When a company builds a manufacturing facility there are a lot of considerations that go into determining its capacity, and even more considerations that go into determining its output

Let us take a look at the case of Tesla

This is the most recent communication from the company on their Installed Annual Capacity

But what does it mean ?

To understand that it is helpful to lay out a more detailed Capacity Map

First, there are currently four relevant locations

- Fremont, California, USA

- Shanghai, China

- Brandenburg, Germany

- Austin, Texas, USA

Tesla also has other manufacturing facilities

At each facility there are or will be Final Assembly lines for various different products

For each of these lines we can expect a certain volume of output based on the hourly equipment parameters applied to a standard 8-hour shift

- these number have been highlighted in Blue

The annual capacity of each line then depends on how many crews of human operators get recruited and trained

- which determines for how many hours per week the lines can be operated

These crews are normally referred in terms of how many shifts they represent

We can then calculate equivalent annual output based on how many crews are available and the number of shifts that they represent

For example :

- a 4-shift operation on the Model 3 line in Shanghai might have an annual rating of 225,000 vehicles

- whereas a 1-shift operation on the adjacent Model Y line in Shanghai might only have an annual rating of 56,250 vehicles

This would be illustrative of a mature full-speed operation for the MIC Model 3, but only the beginning of a production ramp-up for the MIC Model Y

The total annualized output for Shanghai would then be 281,250 units or about 70,300 units per quarter

The Green highlighting on the center part of the table shows what we think the scheduling may have been for 2021 Q1

- Fremont = 437,500 annual or 109,375 units per quarter

- Shanghai = 281,250 annual or 70,312 units per quarter

Giving a total of 179,687 units for the quarter

This scheduled capacity for Model 3 and Model Y then gets further modified for any holidays, line slowdowns, supply chain problems, etc

And we can add an estimate for Model S and Model X line which was undergoing an upgrade and then needed to be ramped back up to normal speed

So in 2021 Q1 these Tesla facilities had a "nameplate capacity" of 1,050,000 units and a scheduled capacity of 718,750 units per year or nearly 180,000 per quarter before adding Model S and Model X

Actual output efficiency is then measured relative to that last number

Questions ?