Tesla races to fulfill its Model 3 promise

Can Elon Musk finally live up to one of his big promises for Tesla’s Model 3?

The electric car maker’s first mass production vehicle has fallen short of ambitious production targets. After missing two previous production goals, Musk has told investors the company will be making 5,000 Model 3s per week by about this time of year.

 

Tesla races to fulfill its Model 3 promise
Tesla races to fulfill its Model 3 promise

He originally promised Tesla (TSLA) would be building 5,000 Model 3s per week by the end of 2017. The company made 800 in the final week of the year.

Then he scaled back the promise, saying Tesla would be making 2,500 a week by the end of the first quarter, on its way to building 5,000 a week by the end of June. It fell short of that target as well, building 2,020 in the seven days before its April 3 report on production levels.

The production targets are more than just a matter of pride; they’re crucial for Tesla to become profitable on a sustained basis.

Tesla has a waiting list of about a half a million customers who have put down $1,000 deposits to buy a Model 3. But it ended the first quarter having delivered fewer than 10,000 of the cars. Tesla is giving some people who put down deposits the chance to order the options for their cars — but they will have to pay an additional $2,500 towards the purchase price in order to do so. And they still aren’t getting a firm date for when their car will be ready.

It has only reported two profitable quarters in eight years as a public company, and it has enough debt to pay back later this year that critics worry it would face a cash crunch. It may have to borrow a lot more money or sell additional shares to fund its operations.

Moody’s, which downgraded its credit deeper into junk bond status earlier this year, estimates Tesla will need to raise as much as $2 billion — even if the company hits its target.

But Musk has continued to insist that he’ll hit the target of 5,000 Model 3s a week, and that will give the company enoughsales and profit to make it unnecessary to raise more cash.

Some analysts believe he’ll hit the 5,000 goal. But Goldman Sachs analyst David Tamberrino, who has a sell recommendation on the stock, questioned whether Tesla would be able to sustain that level production.

Tesla did not respond to a request for comment on its current production status.

The company built an extra assembly line under a huge tent outside the company’s Fremont, California, factory.

No standard automotive solution could be built in time, so we created a new solution. It is working & has slightly higher quality than the more traditional general assembly line. Perhaps most surprising is that the total cost of production in the Sprung tent is lower.

— Elon Musk (@elonmusk) June 27, 2018

The massive tent where Tesla is operating a new assembly line to build the promised number of Model 3 cars.

Musk has been essentially living at Tesla’s factories — the Fremont plant where cars are assembled, and the Nevada “Gigafactory” which builds the lithium ion batteries to power the cars. A recent Wall Street Journal interview with himdescribed him wearing the same Tesla t-shirt for three straight days and sleeping under his desk.

 

 

He’s had a contentious few months at Tesla — sparring with stock analysts on the most recent investor call in May, vowing to create a new service to rate the credibility of media outlets he believes are treating him unfairly, and mocking critics on Wall Street who question whether he would finally meet the goals to justify the stock’s lofty valuations.

For a while it seemed as if investors had finally fallen out of love with Musk and Tesla. After reaching a record high last September, the stock lost about a third of its value, falling to a 52-week low in April, just ahead of its report on Model 3 production. But Musk’s assurances that production was on track and that the company would finally be profitable in the second half of this year helped bring back the value of the stock. Shares have regained more than three-quarters of their lost value.

21 COMMENTS

  1. 829863 116332Immer etliche Firmen bentzen heutzutage Interimmanagement als innovatives und ergnzendes Gertschaft i. Spanne der Unternehmensfhrung. Denn hiermit wird Kenntnisstand leistungsfhig, bedarfsgerecht und schnell ins Unternehmen geholt. 75517

  2. Thank you for any other informative blog. The place else may just I get that kind of info written in such a perfect approach? I have a challenge that I’m simply now operating on, and I’ve been on the look out for such information.

  3. I was suggested this web site by my cousin. I am not sure whether this post is written by him as nobody else know such detailed about my problem. You are amazing! Thanks!

  4. I do trust all the concepts you have presented on your post. They’re really convincing and can certainly work. Nonetheless, the posts are very brief for starters. Could you please extend them a bit from next time? Thanks for the post.

  5. I haven¡¦t checked in here for some time as I thought it was getting boring, but the last few posts are good quality so I guess I will add you back to my everyday bloglist. You deserve it my friend 🙂

  6. I think this is one of the most vital information for me. And i’m glad reading your article. But want to remark on few general things, The site style is perfect, the articles is really nice : D. Good job, cheers

  7. Take care for an perfect material covered throughout the time of your online site, what happens is a touch of test to formulate your web page users. Who seem to reported by this short maintain in mind? . . . .Even talk lightly and after that have a crucial remain; you can expect to reach appreciably.

  8. It’s perfect time to make some plans for the future and it is time to be happy. I have read this post and if I could I desire to suggest you some interesting things or tips. Perhaps you can write next articles referring to this article. I desire to read more things about it!

  9. You really make it seem really easy together with your presentation but I to find this matter to be actually something which I believe I would by no means understand. It seems too complicated and very vast for me. I am having a look ahead for your subsequent put up, I¡¦ll try to get the dangle of it!

  10. I like the valuable info you provide in your articles. I will bookmark your weblog and check again here frequently. I’m quite certain I’ll learn plenty of new stuff right here! Good luck for the next!

  11. I am not sure where you’re getting your info, but great topic. I needs to spend some time learning much more or understanding more. Thanks for fantastic information I was looking for this information for my mission.

  12. Good website! I really love how it is easy on my eyes and the data are well written. I am wondering how I could be notified whenever a new post has been made. I’ve subscribed to your feed which must do the trick! Have a nice day!

  13. My husband and i were absolutely peaceful when Jordan managed to deal with his inquiry from the ideas he discovered out of the weblog. It’s not at all simplistic to simply possibly be giving freely helpful tips that other people have been trying to sell. We really already know we now have you to appreciate because of that. The entire explanations you have made, the easy web site menu, the relationships you will make it possible to promote – it’s most remarkable, and it’s really making our son and us recognize that that situation is satisfying, which is tremendously mandatory. Thank you for all the pieces!

LEAVE A REPLY

Please enter your comment!
Please enter your name here