Plagued with delivery delays and manufacturing issues, Tesla has indicated that there is “major progress” in overcoming production problems that have hampered the all-electric Model 3’s roll out. Tesla wrote in a letter to investors saying “As a result of the significant growth in our production rate, we made as many Model 3’s since December 9th as we did in the more than four months of Model 3 production up to that point.” Now it seems that Tesla may likely build about 2,500 Model 3 sedans per week by the end of the 1st quarter, which is half the numbers originally promised. However, by the 2nd quarter Tesla hopes to ramp up production to 5,000 Model 3 sedans per week in 2018. The goal now is the focus on “quality and efficiency” and slowly boost production from there on.
Meanwhile, Tesla delivered 29,870 vehicles during the 4th quarter, including 15,200 Model S notchback and 13,120 Model X crossovers. Just 260 Model 3 sedans were build during the 3rd quarter.
The $35,000 (After Federal and State incentives and rebates) all-electric Model 3 sedan has been met with great enthusiasm and fanfare with roughly 500,000 pre-orders to date. Production problems with battery modules initially caused problems and needed a redesign. Tesla’s long term success is heavily relying on the Model 3 as this is the most affordable and mass-market electric car to date from the company. In the 4th quarter Tesla delivered just 1,500 Model 3 electric vehicles, which fell short of Wall Street expectations. Analysts had expected over 4,000 Model 3 sedans to be delivered to customers during the 4th quarter.
Tesla is high cash burning company that is burning through cash at a rate of $8,000 per minute. Even as the cheapest electric car in the Tesla line up, production has had a hard time keeping up with strong demand. Production delays such as this gives critics and wary investors another reason to bash Tesla for its lofty and overstated goals. This may impact the company’s ability to raise cash in the future, but Elon Musk knows how to build up hype, so critics may continue to rant.