Tesla's Austin factory started Model Y production late last year, company reveals

Tesla started to produce vehicles at its $1.1 billion Travis County manufacturing facility late last year, the automaker confirmed Wednesday.

"Builds of Model Ys started in late 2021 at Gigafactory Texas. After final certification of Austin-made Model Y, we plan to start deliveries to customers," the company said in its fourth-quarter earnings report.

Tesla, which in October said it was moving its corporate headquarters to Austin, also said its Model Y vehicles in both Texas and Berlin are undergoing equipment testing. The Model Y is Tesla's SUV, and is expected to become a key product for the company. Texas also listed several other vehicles — the Cybertruck, Tesla Semi, Roadster and a "future product" — as still in development.

Previously: Tesla officially moves headquarters to site of new Austin factory

Tesla started producing vehicles in Austin in late 2021, the company said Wednesday. The automaker released this image of its general assembly line and initial production of Model Y vehicles in Austin.
Tesla started producing vehicles in Austin in late 2021, the company said Wednesday. The automaker released this image of its general assembly line and initial production of Model Y vehicles in Austin.

Construction of the Austin-area facility has moved quickly since Tesla CEO Elon Musk announced in July 2020 that he had selected the southeast Travis County site for the facility, which the company has dubbed Giga Texas.

Tesla has said it plans to produce its Cybertruck, Semi, Model 3 compact sedan and Model Y vehicles at Travis County site. Tesla received tax breaks from Travis County and the Del Valle school district valued at more than $60 million combined to build the facility. Musk has said the facility could eventually employ 10,000 workers.

In Wednesday's earnings release, Tesla said the pace of production in Austin will be ramping up in the coming days, and said progress continues on the Cybertruck. That follows a recent report from Reuters news service that the Cybertruck could be delayed until the first quarter of 2023. Musk also revealed this week through a post on social media site Twitter that he's been driving a Cybertruck around the Austin-area facility.

More: Welcome to Musklandia: Austin adjusts to life with Tesla and its eccentric billionaire boss Elon Musk

"The pace of production ramps in Austin and Berlin will be influenced by the successful introduction of many new product and manufacturing technologies in new locations, ongoing supply-chain related challenges and regional permitting. We are making progress on the industrialization of Cybertruck, which is currently planned for Austin production subsequent to Model Y," Tesla said in a note to investors.

Company executives had hinted that the Austin-area facility would start production around the end of 2021, and industry analysts had suspected it was nearing or had already reached its start. Musk also tweeted last month that the factory would host a grand opening party with factory tours in early 2022.

On a call with investors and analysts Wednesday, Musk said 2021 was a "breakthrough year" for Tesla. Now, he said, the company will focus heavily on its two newest factories.

“After an exceptional year we shift our focus to the future: Texas and Berlin,” Musk said. “It is worth noting that we, as the internet has observed, have been making quite a few cars in Texas.”

Tesla Austin factory expected to be centerpiece of company's production

Industry analyst Dan Ives of Wedbush Securities said he expects Tesla's Austin-area facility will be the centerpiece of Tesla's production for the coming years.

"Launching the Austin production is very important to Tesla expanding both domestic and global production of Model Y's which are set to have a massive year in 2022," Ives said.

Tesla reported record fourth quarter and full-year earnings, and said it had record vehicle delivery numbers in 2021. Tesla’s delivery of 936,000 vehicles for the year was nearly double its 2020 numbers. In the fourth quarter alone, sales hit 308,600, a new record.

Tesla said it made $5.5 billion last year, up from 2020's $3.47 billion in net income, marking the third straight year Tesla was profitable. Of that, Tesla made $2.32 billion in the fourth quarter, at $2.54 per share, beating Wall Street expectations of $2.36 per share.

The company reported revenue of $17.72 billion, which also beat expectations. About $314 million of that revenue came from selling regulatory credits to other automakers to meet government pollution standards.

“There should no longer be doubt about the viability and profitability of electric vehicles,” the company said.

Austin, along with Tesla's factory in Berlin, is expected to play a key role in boosting Tesla's production as demand continues to grow for electric vehicles. Ives predicted the Austin-area facility would begin rolling out cars by early February and that the facility would ramp up to reach full capacity by the fourth quarter of 2022 or early 2023.

Musk said Model Ys being built in Texas currently are made with a structural battery pack and that deliveries will start after final certification, which he predicted would be “fairly soon.”

However, once these do make it to delivery, at least for now, any cars produced in Austin will need to be taken out of state before being sold to Texans. State law currently prevents automakers from selling directly to consumers, as Tesla does.

Musk also said the Austin-area facility includes office space, with some of those offices overlooking the production line, although he did not specify if those are the headquarters offices.

Tesla said Wednesday that it aims to increase production quickly in part through the two newest factories.

"We believe competitiveness in the EV market will be determined by the ability to add capacity across the supply chain and ramp production," the company said.

"While we battled, and everyone did, with supply chain challenges throughout the year, we managed to grow our volume by nearly 90% last year," Musk said. "This level of growth didn't happen by coincidence, it was a result of ingenuity and hard work across multiple teams throughout the company."

Supply chain issues are expected to continue, but on a call with investors, Musk said Austin-based Tesla still expects significant growth, above 50% in the next year.

Musk said Tesla will be focused on scaling up this year and said no new vehicle models will launch this year, because introducing any new vehicles would decrease capacity.

Tesla's non-vehicle products will also be a focus for the company. Musk said that "Optimus," a humanoid robot product better known as a Tesla Bot, will be a focus for the company in the next year, though it’s not clear if these would be produced in Austin. Musk predicted the bot's initial use will be in factories moving parts around or other similar tasks, and it will also ready to be produced next year. He added, the bot business has the potential to be more significant than Tesla's vehicle business over time and implied it could help combat future labor shortages.

Musk also said the company’s full self-driving software, which is in testing, will be profit driver moving forward. Tesla insurance, which is now available in Texas, Illinois, Arizona, California and Ohio will also be scaled. Company executives said they are "comfortable with what they see in Texas" and are looking to the state as a model as expand to other states this year.

'Something we've all been watching'

Amber Gunst, CEO of the Austin Technology Council said that it's exciting to see the facility start production.

"It's something that we've all been watching," Gunst said. "The factory going up and we've been anticipating people being able to start working there and start building and having vehicles hit the road, so we're just really excited to see this project move forward and this company be here and to offer great quality jobs to Central Texas."

The start of production comes as Austin increasingly becomes the center of activity for Tesla. In October, Musk announced that Tesla was moving its corporate headquarters from California to Austin, but he gave little detail at the time. In December, documents filed with the U.S. Securities and Exchange Commission showed the company had formally relocated its corporate headquarters to the same site as the factory.

Texas and Austin itself are also increasingly important to Musk. In 2020, the billionaire said he moved to Texas to be closer to the gigafactory and SpaceX’s South Texas facility.

The CEO has also seemingly quietly expanded many of his other ventures into Central Texas as well. This includes his tunneling and infrastructure company, the Boring Co., which has facilities in Pflugerville and Bastrop; a potential Austin SpaceX office; a potential Neuralink office; and the headquarters of his private foundation, the Musk Foundation.

This article originally appeared on Austin American-Statesman: Tesla confirms Model Y production has started at Austin factory