Does Tesla have plant, permits to build 500,000 electric cars a year?

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Tesla Model 3 design prototype  -  reveal event  -  March 2016

Tesla Model 3 design prototype - reveal event - March 2016

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The 2017 Chevy Bolt EV is due at dealers within a couple of months, and little is known about the next Nissan Leaf.

That leaves the Tesla Model 3 as the biggest question mark among electric cars.

We know what the car is, since Tesla unveiled prototypes this spring. It's whether the company can get the Model 3 into production on schedule.

DON'T MISS: Tesla Model 3 targets: 100K in 2017, 400K in 2018, say skeptical suppliers

Tesla Motors missed its initial release dates—perhaps more realistically viewed as "targets"—for its Roadster, Model S, or Model X.

It has said the Model 3 will go into production before the end of next year.

In May, Tesla CEO Elon Musk moved the company's already aggressive targets for building half a million electric cars a year from 2020 to 2018.

Tesla Motors production line for Tesla Model S, Fremont, California

Tesla Motors production line for Tesla Model S, Fremont, California

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That followed more than 350,000 potential buyers putting down $1,000 deposits for a place in the Model 3 reservation queue.

But does Tesla have the factory capacity to produce half a million cars three years hence?

The assembly plant in Fremont, California, that it bought from Toyota in 2009 had that capacity at its production height.

DISCUSS: Tesla says it will build 500K cars a year by end of 2018; can it?

In late September, analyst Trip Chowdhry of Global Equities Research wrote, "We drove around the periphery of the new construction ... happening adjacent to the current Tesla Factory Location."

"It seems to us," he continued, "that the new construction area is almost the same size as the existing Tesla Fremont factory."

From that, he concluded that Tesla planned to double its production from the plant's current 500,000 units to 1,000,000 units a year.

Tesla's Fremont factory and surrounding land. Image via Google Maps.

Tesla's Fremont factory and surrounding land. Image via Google Maps.

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Commentators quickly raised one core problem with Chowdhry's report (while noting that Global Equities Research has long been very positive on Tesla's prospects).

What he observed seemed more likely to be site preparation work recently started by developer Lennar Corporation for a 111-acre development it has long planned adjacent to the Tesla factory.

The project includes 2,200 housing units and 1.4 million square feet of office and research space.

Then a potentially more serious problem reared its head.

Two days after Chowdhry's note, a detailed article two weeks ago in Daily Kanban suggested that the current emissions permit for the recently upgraded paint shop at the Fremont plant limits production to roughly 200,000 vehicles.

2012 Tesla Model S painting process

2012 Tesla Model S painting process

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It noted, "If any future expansion or upgrade increases the Fremont plant’s net emissions by more than 6.5% over currently-permitted levels, Tesla’s paint shop will be required to comply with the extremely stringent Lowest Achievable Emission Rate (LAER) standard."

While that site has been relentlessly anti-Tesla in its coverage, the article remains a good piece of investigative reporting.

The concern over emission levels underscores the enormous challenges of operating a huge manufacturing facility in California, which has among the most detailed and restrictive environmental regulations of any state in the U.S.

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