Tesla’s Model 3 Production Misses Initial Q3 Predictions

Tesla Inc. missed the ambitious third quarter production predictions for the Model 3 sedan. This left many customers, investors and analysts worried that the automotive manufacturer won’t be able to meet any of their future targets for the electric car.

The company reported that it delivered 220 Model 3 vehicles in the quarter. A total of 260 Model 3s have been produced at their factory in Fremont, California since production began back in early July. At the time, the CEO of Tesla, Elon Musk, tweeted his prediction for the vehicle’s output stating they should be making 100 Model 3s in August and above 1500 in September. He also predicted at the time that the company would be making 20,000 Model 3s per month by December.

Musk also warned customers and investors in July that meeting these goals would not be an easy task stating specifically that the company would go through “at least six months of manufacturing hell.” He said that there are a ton of factors that could go into slowing down the production process, like machines breaking down or suppliers not coming through with parts.

Tesla blamed the slow state of production on various bottlenecks across its assembly line. The company calmed worries by stating that it was aware of the issues and is confident they can be fixed. In a statement to the public, Tesla said “It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,” they continued “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.” (http://bit.ly/2xYYg2L)

The company currently has more than 500,000 people on a waiting list to get their hands on a Model 3. The car costs almost half of what the previous Tesla models have and is a critical stepping stone for their goals of becoming more than a niche luxury car manufacturer. Tesla has stated previously that the company wants to move into mainstream automotive production.

An analyst working at Kelley Blue Book, Akshay Anand, said that automotive manufacturing is one of the most difficult tasks a company can take on. He also noted that Tesla has had slow production ramp-ups for its other vehicles the Model S and Model X, as well. In his report, Anand said “This is just one quarter, but if production misses continue into the fourth quarter and even beyond, Tesla will be in a much more precarious position since their future largely relies on the Model 3 being a success.” (http://bit.ly/2xYYg2L)

While the company may have had issues with the Model 3, Tesla has reported record vehicle deliveries for the third quarter. The company delivered 26,150 vehicles in the July through September period, which is up 4.5% from last year’s third quarter. Over half of the vehicles delivered were the Model S while the rest was made of the Model X and a very small percentage of Model 3s. Despite the influx of deliveries Tesla still saw their shares fall 1% to 336.79 in after hours trading. Manufacturing Talk Radio will continue to follow the Model 3 production so be sure to check back soon for more details.

Sources:

www.manufacturing.net/news/2017/10/tesla-model-3-production-falls-short-targets-q3-0

fortune.com/2017/10/02/tesla-model-3-production/?utm_campaign=fortunemagazine&utm_source=twitter.com&utm_medium=social&xid=soc_socialflow_twitter_FORTUNE