Seize the Day: Tesla in Detroit

Seize the Day: Tesla in Detroit

Tesla has proven its ability to see possibilities others do not (or cannot) and then act on them. Future expansion of manufacturing capacity is a matter of time. I would respectfully suggest the company examine the possibility in the future of taking part of the auto industry home, i.e. to Detroit.

Granted the city is bankrupt, but the adage "buy low" is the mantra of all successful investors. Land and infrastructure is rock-bottom in Detroit now. The region is hungry for new opportunities. Compare that to expansion/startup costs in other parts of the country, especially California.

Establishment of a manufacturing presence in Detroit itself would also send a tremendous message. Help reinvent Detroit as you have re-invented the auto industry.

Tesla stock holder

VineetBeniwal | August 9, 2013

Agreed... It can already see the stocks soaring if tesla makes the announcement of setting up a plant in Detroit. It might not happen anytime soon though. They are not even close to the peak production capacity of Cali plant so obviously it won't make sense to set up more shops right away but considering how cheap Detroit can be they can buy an ex auto plant in Detroit just to send a message and gain American confidence.

Brian H | August 9, 2013

Even Elon can't fix Detroit.

Kleist | August 9, 2013

Tesla started with a clean sheet of paper and need to keep it that way.

Detroits problem is that federal tax policies reward (car) companies to produce offshore. US consumed 12 M cars in 2012 and produced 3 M in the US ( including the BMWs, VWs, etc ). Japan and Germany consume 3 M each but produce 6 M each.

Timo | August 10, 2013

@Brian H, give him time. | August 10, 2013

Kleist +1

"...Tesla started with a clean sheet of paper and need to keep it that way..."

Totally Agree.

Please Tesla, I'm begging you, do NOT even entertain this jungle.

Detroit ceased being a part of the United States in the 1960s.

Unions, entitlements, and everything else that is anti-freedom, anti-free market, anti-entrepreneurial, anti-fair.


robchale | August 10, 2013

I agree....any physical action would be years off. No rush, just a concept. And certainly no one action or company (or clearly one industry) can fix Detroit.

"Detroits problem is that federal tax policies reward (car) companies to produce offshore. "

"Unions, entitlements, and everything else that is anti-freedom, anti-free market, anti-entrepreneurial, anti-fair."

...last time I checked, California was part of the US too, so these arguments are off the mark. The difference between CA and Detroit? Lower cost of living, land, etc... Plus a geographic advantage in the East and adjacent to Canada

Clean slate? I believe Tesla took over an old Toyota plant in Cal.

Regardless Tesla keep up the good work!

Tesluthian | August 10, 2013

I can appreciate the Detroit sentiment, they need to figure out solutions. However my favorite choice for a second auto plant is Brownsville, Tx. That's where Elon is already putting in a launch site for SpaceX.

Also this Brownsville, Tx area is outside the Eagleford shale play, all the way in the southeast tip of Tx, see link.

It's also one of the poorest areas of Tx, so they have a willing workforce. Lots of open space here. Tesla could buy enough land to facilitate an industrial park complex. They could start small and eventually build out to five times Tesla's Fremont plant size or 2&1/2 million car capacity a year. There's even room for a solar farm.

Brownsville Tx also has Port Isabel:

Brownsville is also close to the proposed NAFTA superhighway:

Again, I sympathize with Detroiters. Perhaps when Tesla gets to 5 million cars a year, then they can put up sort of facility in Detroit.

Kleist | August 10, 2013

@robchale - CA cities have the same problems. Factory was empty.

jman | August 10, 2013

Detroit needs to start somewhere with job creation and most of all hope. If the land and infrastructure was purchased for Tesla, in the future this would be a fantastic move for them. Great message to people living there and smart business move, less travel for future cars to travel the entire eastern portion of the country, Canada, and overseas!!!!

Keep the revolution moving Tesla !!!

daspecster | August 13, 2013

I've been in Detroit for a little over a year now. It's been awesome!

First of all I want to say that it would be amazing if Tesla built a plant here. Even a store would be awesome! Right on Woodward ave. This week is Dream Cruise week and it would be cool to see more Teslas there. Enough people have money for them here. A Model S would fit the average commute in perfectly. Most of the car garages here have electric hookup for the Chevy Volt and other electric cars already.

To the nay sayers, I would say that you really have no clue what you're talking about and Tesla coming or not...the electric car is already in Detroit.

Vawlkus | August 13, 2013

So Detroit managed a knock off of a Tesla Roadster how many years after Tesla made them?

Cindy I II III | August 13, 2013

Did I see somewhere that Elon had to lay off people in Detroit in 2008? If true, Tesla was there.

Never been to Detroit. Looks awful on TV. Bankruptcy didn't help its image... However, it would be a great risk mitigation move for Tesla to enhance total company value by having a 2nd production site in case of earthquakes in California, which is matter of when not if.

TeslaRocks | August 13, 2013

IF Tesla was looking for additional capacity, which they won't need for years, but IF they wanted to get it anyway, I think the best place in North America would be somewhere in southern Ontario in one of the auto plants that recently closed, perhaps. The price of electricity in Canada is rock-bottom, which is important when most of your labour force is composed of robots. Also, regarding the human employees, what allowed other automakers to keep Ontario auto plants open longer than the US Rust Belt is that they saved a lot on the cost of healthcare (at least according to my business history prof). The loonie being lower than the greenback can be another advantage, although this is not so much the case right now, at close to parity. Also, some factories have recently relocated from Ontario to the US because of generous government cash and Obama stimulus, from what I understand.

Now that I shared this idea, I would also like to mention that the next factory, other than expansions at the current one, should probably be somewhere else in the world, such as Europe or Asia, where a lot of the demand will be, in order to lower shipping costs and simplify logistics. But of course this is all a long time away, when volume will be huge and cost-cutting will have to become incredibly creative. Tesla is still in pioneer territory for many years, so there are more important decisions to make and a new factory remains irrelevant. Buying a Detroit now means it has time to collapse before Tesla makes use of it.

wcalvin | August 13, 2013

I'd estimate that it takes three years to convert an existing plant to Tesla's production line (including training up the workforce in Fremont). They would need to start before Fremont was getting close to capacity.

So yes, the helpful news of Tesla's purchase could come in another year or two.

TeslaRocks | August 13, 2013

Oops, at the end, I meant "Buying a Detroit [factory] now"... of course.

Iowa92x | August 14, 2013

Fleshing out the Fremont factory will be first, followed by a Euro factory to serve the anti-gas crowd. Asia third, then loop back to a new factory in the U.S. Gen III will significantly ramp up yearly volume, look to the Euro factory to focus on III where they prefer no gas and smaller rides.

Tesla is the opposite of Detroit, I don't see them building there other than maybe to snag a fire sale land deal.

jackhub | August 18, 2013

I have nothing against Detroit, but the industries there do not have the skill sets required for Tesla production. The Model s is not a traditional automobile. It is quite different requiring different skills for design and implementation. It is much more an electronics/software product. Silicon valley has the right skills.

I expect to get pushback on this comment, but I think the big gap between those who have experienced the Model S and those who simply write about it, is an understanding of how serious the difference between ICEs and the Model S really is . . . and why that difference will likely persist!

Kleist | August 18, 2013

Is Tesla a car company? Yes, they make car but definetly not in the tradition sense. Elon thinks in a much bigger box and Detroit just means he will be restricted.

evpro | August 20, 2013

A second factory location "somewhere" would help solidify Tesla's future. Right now any disruption (major earthquake) is a risk factor to rising production and the positive financials.

It would be nice to keep it "made in USA" to add jobs here and boost manufacturing exports/trade balance.

Energy_Freedom | August 20, 2013

I don't see any reason to set up Tesla operations in Detroit. The only reason the traditional US auto industry is there is because that's where the big auto company's founders happened to live.

IMHO Tesla is in already in one of the best places possible, California. You have an eco-friendly culture there, a political climate that appreciates what Tesla is doing and a great quality of life for its employees.

I only see a few negatives: The cost of living in So. Cal for housing means employees need better compensation than in other areas. State taxes are pretty high. Most people in the US live in the eastern part of the country, not out west.

I do think setting up a second Eastern center might make sense. It should be on a shipping port to make exporting to Europe, The Mediterranean Basin, Africa, etc. less complicated. Low state taxes and with a friendly attitude from the government. Someplace with an affordable cost of living but with good quality of life amenities in consideration of employee morale. I say Jacksonville, Tampa, Miami or maybe New Orleans. I can't see how opening up a new production center on the Canadian border where its freezing cold half the year is an advantage.

RanjitC | August 21, 2013

I'm surprised that Mr. Musk who is such a smart man opened a factory in CA. The south is much friendlier to business which is why Toyota shut down the Fremont plant and with BMW, MB,and Honda moved to the south. CA=MI. Even Apple uses china for manufacturing and NV for tax purposes.

Kleist | August 21, 2013

@RanjitC - Elons smartest move was to start in the Fremont plant. Why? If you start a new production line most important is that you development engineers and your executives are available on a moments notice... hop in the car and 20 min later you are on the factory floor. A simple fix is an afternoon affair. Put a 2 hour flight in between and it takes 2-4 weeks, 6 hour flight it becomes 2 month, 15 hour flight it is 6 month. We have factories all over the world and the above is our experience of 25 years. For a new factory nothing is more important and faster then being close.