Tesla’s Fremont, California assembly plant once cranked out Pontiac Vibes and Toyota Matrixes under a joint venture between General Motors and Toyota, but could a current GM factory one day give way to Tesla production?
Tesla CEO Elon Musk put that possibility out there during a 60 Minutes interview on the weekend. As one might expect, Musk’s comments were greeted with skepticism.
(Associate Editor’s note: Booze is always a cherished holiday stocking stuffer.)
Speaking to Lesley Stahl (who’s a big ol’ meanie, according to some of Musk’s most ardent supporters), Musk remarked, “It’s possible that we would be interested. If they were going to sell a plant or not use it that we would take it over,” when speaking about GM’s recent plant closure announcement.
The facilities targeted for possible closure include Michigan’s Detroit-Hamtramck Assembly, Lordstown Assembly of Ohio, Ontario’s Oshawa Assembly, and two transmission plants in Maryland and Michigan. Gone from these plants, as well as GM lots everywhere, would be the Chevrolet Cruze, Volt, and Impala, Buick LaCrosse, and Cadillac’s XTS and CT6.
Currently, Musk’s ambitions center around China, where Tesla is in the early stages of building an assembly plant in Shanghai (and eating it in terms of sales and revenue, due to tariffs woes). That plant will require quite a bit of capital, and Tesla only posted a profit last quarter for the second time in its history. Cash-positive at last, but facing pressures. Also, Musk has a history of impulsively saying things that shouldn’t be listened to or believed.
Still, the company needs space in which to build its upcoming Model Y and long-promised pickup. An existing facility on land zoned for the building’s use would be a better option than sourcing land, seeking approvals, and covering building costs, unless it plans to go the tent route for all future models.
One issue facing a Rust Belt Tesla plant would be the regional pull of the United Auto Workers, which represents workers at the three U.S. GM plants. Ontario, with its higher electricity and labor costs, seems a less-likely option for Tesla. The exchange rate between the two countries might not be so favorable to the U.S. in years to come.
Indeed, Musk took time during his interview to slam the UAW, claiming an “aggressive campaign” is afoot at Fremont to unionize the workers there. Claims of safety violations, high injury rates, and other unfavorable business at the plant are a “load of nonsense” created by the UAW, he added.
The UAW, meanwhile, is busy fighting GM to keep the plants open. The automaker describes the plants as “unallocated” rather than idled or closed, but union brass claim that terminology won’t get GM out of its contract obligations. In Ontario, Unifor boss Jerry Dias said Tesla is not the answer to Oshawa Assembly’s problems.
[Images: General Motors]
Good article.
Lordstown makes the most sense to me because it’s not Ontario (non-US) or Detroit. It would be most ironic to build Teslas in a state (Michigan) that doesn’t even allow it to sell cars in its own stores.
As for unions of any kind – they aren’t required as long as workers are treated/paid well. This is why the workers in the transplant factories don’t unionize, not to mention the obvious corruption which occurs when workers give their dues to union brass, only to see their jobs disappear anyway.
Lordstown makes sense. Plenty of auto building experience in Ohio, and Honda has been proving for 30 years that the UAW isn’t needed to make cars in the state.
Except that Michigan is now a “right to work” state, and Ohio isn’t.
On the Tesla fanboy forums, they suggest using the surplus UAW/Unifor labor to install SolarCity roofs on houses. Can’t wait to see how that plan works out.
Stupid, yes. Not to mention the fact that SolarCity seems to have the opposite problem – not enough business.
There’s probably a more sustainable market for Baby Shark toys. Isn’t existing production already stuffing overflow lots with Tesli?
Where did you hear that? Do you really think Tesla is producing cars as fast as possible just to push them into the ocean, or into empty lots?
Tesla has a delivery problem, not a sales problem.
” Do you really think Tesla is producing cars as fast as possible just to push them into the ocean, or into empty lots?”
Musk is certainly capable of running a Potemkin Motors as a smoke screen for investors.
If that’s not the case, good. I wish unemployment upon no working person.
“Tesla has a delivery problem”
No, they didn’t. that was a massive lie from Elon the Fraud.
You’re right. The Tesla shorty ground force on Tweater is publishing pics of thousands of Model 3s in inventory parked around the US from coast to coast.
Also it appears the quality deficiencies are causing a massive backlog at service facilities.
I thought the Toyota Matrix was made in Canada, whereas the Pontiac Vibe was produced at NUMMI. (I used to drive a NUMMI car, a ’99 Chevy Prizm 5-speed; sold it to a friend years ago; it’s still running.)
You are correct. The Corolla and Tacoma were built there, but not the Matrix.
How about buying a car factory from one of the Korean non-for-profit companies?
Say what you will about GM, but I bet they can teach Tesla a thing or two about manufacturing. Maybe Tesla should farm out the production of the actual, for-real $35,000 Model 3 to GM and split the profits.
I didn’t realize GM’s build quality was so well known that other companies would love to have GM run facilities to make other company’s cars.
Could they teach Tesla how to squeeze 2 pennies out of 1 for interior trim piece cost savings?
Someone doesn’t work in industry.
“General Motors Fort Wayne Truck Assembly plant today earned the prestigious J.D. Power Gold Plant Quality Award and was recognized as delivering the highest-ranked automotive manufacturing quality in the Americas in 2017. The Chevrolet Silverado, Silverado HD and GMC Sierra and Sierra HD are produced at Fort Wayne Assembly.”
I hope that’s not the facility where the exposed frames are getting rained on through the leaky roof.
The Solar City roof panels installed after Elon takes over will help shed the rainwater.
It doesn’t look like GM manufacturing is that effective if they are not capable of profitably making ICE and electric cars.
GM isnt profitable?
Didn’t Musk say there’s no profit at $35k?
Musk said it would cost them $38K to build the $35K car. So yeah you could say there is no profit on the $35k car.
He also claims he just needs a “few weeks” to wring out a little cost through improved production efficiency. I’m not sure how they are going to cut that many hours out of building them.
I don’t find the build quality the problem as much as the quality of the components. Are the workers at a GM plant any worse than a Ford or FCA plant? I presently have a Chevy S-10 that I bought new going on 20 years. If the build quality were that bad it would not have made it to 20 years. If you want to state the quality of the parts are not as good on many of today’s cars then that would be because the contract goes to the lowest bidder but many vehicles share the same suppliers regardless of manufacturer. I would say any of the major manufacturers could show Tesla how to manufacture their cars more efficiently.
You’d think the circus tents are cheaper.
Why not buy a shuttered shopping mall, erect a bunch of “tents” in the parking lot, do a half-a*ssed job of nailing their advanced “production equipment” to the floor with partially-set studs, and go from there? Who cares if local zoning and building inspectors object? Musk told the SEC where to get off, and told CBS this past weekend he has no respect for them. A few local bozo inspectors would be a cake walk compared to a national regulator!
After all, Musk said a couple of days ago that Tesla was just about completely sunk until that tent was installed. He credits the tent with all the wonderfulness that has happened since Spring.
Some fusty old GM plant instead? Hah. Why waste the money?
Your idea doesn’t make much sense, frankly.
Vacant shopping malls have far more value than old factories. They are well located and aren’t loaded with toxic waste.
An old mall makes no sense for heavy manufacturing. An old factory is far more useful, especially if Tesla is paid to take it.
Unlikely.
The market for a second plant’s production in this political climate is near zero. If they were to build another plant it would be outside the US due to the trade war of US vs the world.
China / Europe / Mexico, pretty much everywhere but Detroit.
My guess is once Tesla gets their China plant up and running that they will produce most of their vehicles there.
Hmm, but proposed import tariffs would limit the versatility of the new China plant because Tesla couldn’t then import those models into the US as cheaply.
In this brave corporate world, maybe Tesla can buy the GM plant after talking the desperate municipality into granting them huge rebates on property and employment taxes. Then they can stuff it full of H1B workers to assemble the cars. That way, they can avoid taxes and pay subpar wages! It’s a win-win (only both wins are for one party).
Not a chance. The reason so many transplants produce cars in the US is high shipping costs for heavy products like cars. With Tesla’s razor thin margins, it wouldn’t make sense to try importing cars to the US.
This. Their Chinese plant is to serve the Chinese market because it’s necessary in order to play there. If they wanted to low cost jurisdiction to build cars for the bulk of the world, they’d set up in Mexico as it’s effectively cheaper than China due to geography, labor and better trade agreements.
In the wake of the GM bankruptcy and the end of NUMMI, Toyota effectively paid Tesla to take over Fremont.
I doubt that Tesla needs any more US capacity, but getting one of these old plants would be the way to get it if they did. GM would probably give many of these plants away, plus there would most likely be state and local incentives available. Most of these empty factories are a liability to GM, not a benefit.
If local government is willing to use imminent domain to seize “underperforming property” and turn it into a shopping mall, they should be willing to seize a shuttered GM plant and sell it at a fire sale price to Tesla.
Many of these factories have negative value.
They are one big environmental liability. They are often not well located for other purposes.
They would have an appraised value of negative millions. Not zero, but less than zero.
@pch101: That’s true of older plants like Janesville and Tarrytown NY, but newer plants like Ok. City (now building aircraft engines) and Poletown would be good to go.
However, for Tesla, I think they’d be stretching their supply line a bit too far. I’ve heard they plan on putting future production at Gigafactory 1 in Nevada. It makes more sense for a lot of reasons. Right next to power module production and cheap land. A different labor climate as well.
Tesla has only just started to realize anywhere close to the capacity that the Fremont plant is capable of. They only took on that white elephant because it was basically gifted to them, and they needed a plant.
The major cost of setting up a new plant isn’t the site or the outer building, it’s tooling and other production hardware which can easily cost $1B+. Since Tesla is cash strapped, I don’t see this kind of techie wet dream happening any time soon.
I would rather see FCA take over Detroit/Hamtamck or Lordstown.
FCA has been crying for years they can’t get enough GCs out of Jefferson North and the rumored line in Mack 2 looks awfully improvised. Detroit/Hamtramck would give them more space than Jefferson North for GC production, and it could be retooled for the 2021 model without disrupting production at JN. That would free up JN for some of the other things they have in the works, like the midsize Ram pickup.
That would be great!! from Dodge Main to Detroit/Hamtamck to FCA. The circle is complete.
Musk probably could have picked up Wilmington Assembly for $1 a year ago, now it looks like it will be torn down:
http://www.delawareonline.com/story/money/business/2018/04/16/former-gm-plant-boxwood-road-demolished-harvey-hanna-says-exploratory-plan/521473002/