Tesla’s Model 3 Production Misses Target
Tesla (NASDAQ:TSLA) has reported missing its production goal for the new Model 3 by a wide margin. The company only produced 260 Model 3 cars from late July through September 30. The company had set a goal of producing 1,500 units during the period. The Palo Alto, California-based company delivered just 220 Model 3 sedans in the third quarter.
In a note to investors, Tesla blamed “production bottlenecks” for the delay. Tesla said some of its systems at its Fremont, California, car plant and its battery factory in Reno, Nevada “have taken longer to activate than expected.” Tesla said in a statement, “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near term.”
The Model 3 has become Tesla’s most anticipated car. The success or failure of the Model 3 could make or break the company. More than 350,000 people have paid the $1,000 refundable deposits to secure one of the Model 3s. In July, Tesla Chief Executive Elon Musk warned that “production hell” was ahead for the Model 3.
The Model 3 is a more affordable alternative to Tesla’s Model S and Model X luxury vehicles. The Model 3’s price ranges from $35,000 to near $60,000, before rebates. In many cases, the cars qualify for a $2,500 state rebate and a $7,500 federal rebate. At the lower end, it is half the starting price of the Model S.
In its second-quarter financial report, Tesla said it expects “to achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017.” The company forecast producing 20,000 of them a month by December and set a goal of 500,000 a year by the end of 2018. The company did not say whether those production forecasts remain on track.
Tesla called the third quarter “our all-time best quarter for deliveries” in an investor message posted online. Tesla delivered 25,930 Model S and X cars in the latest quarter, a 4.5 percent increase over the same quarter last year. It was up 17.7 percent from the second quarter of this year. That figure includes 14,065 Model S vehicles and 11,865 Model X cars
However, sales of the Model S and Model X have remained around 20,000 for the last four quarters. Tesla said it was on track to deliver around 100,000 S and X models this year. The automaker counted 4,820 Model S and X vehicles in transit to customers at the end of the third quarter that would be included with its fourth-quarter figures.