Wednesday, 17 January, 2018

Tesla Pushes Back Model 3 Manufacturing Forecast, Again

Tesla now expects to achieve a weekly production rate of around 2,500 Model 3 vehicles by the end of the first quarter Tesla now expects to achieve a weekly production rate of around 2,500 Model 3 vehicles by the end of the first quarter
Delores Daniels | 06 January, 2018, 01:44

The successful launch of the Model 3 is crucial to stemming Tesla's cash burn, which hit a record $1.4 billion in the third quarter, said J.P. Morgan analyst Ryan Brinkman in a note sent Thursday.

Model 3 production is accelerating Tesla had initially predicted to reach the milestone of 5,000 vehicles per week in December, but in November deferred the target to the end of the first quarter.

However, it said it made "major progress" in addressing the issues during the period, meaning its production rate grew significantly towards the end of the three month period and it has made as numerous vehicles in the weeks since Dec 9 as it did in the four months previously.

A Tesla Model S auto is seen in a showroom in Santa Monica, California, US, January 4, 2018. After selecting the Model S Sedan with a 100 kWh battery, Tesla's trip planner tells me the 12-hour trip will be broken up by a 20 minute charge in Bourges, a 25 minute pit stop in Clermont-Ferrand, a 40 minute charge in Albaret-Sainte-Marie and then one last 40-minute top-up in Narbonne before hopping over the border to Barcelona. Tesla said in its release that in the last seven working days of the fourth quarter it made 793 Model 3 cars.

Analysts have again expressed concern over whether Tesla can secure the gross margins on the cars it is aiming for, whether customers will still want the vehicle, and how slower production rates affect the company's other capital-intensive ambitions. The carmaker has been blowing through more than $1 billion a quarter as it's had trouble scaling up output despite spending heavily on robots, assembly lines and tooling for the sedan that is Musk's cheapest yet, starting at $35,000.

Tesla reported deliveries of 1,550 Model 3s in the final three months of the year, trailing analysts' average estimate for about 2,900 units in a Bloomberg survey.

But the company has so far has pushed back its target of making 5,000 Model 3's per week twice.

Nonetheless, Tesla reported that it delivered 1,550 Model 3s in Q4 2017. The company now expects to reach its goal of 5,000 vehicles per week by the end of the second quarter.

Buyers of the latest bonds have since taken a hit, and it would likely cost Tesla more to borrow in that market again.

"We think there is even room to hold off returning to the capital markets if the new schedule goes slightly slower than expected", he said in an email.

"We're also very appreciative of our Model 3 customers, who continue to stick by us while patiently waiting for their cars".

For the entire past year, the shares of the NASDAQ-listed electric auto maker rose 45.70% following a 10.97% slump in 2016.

The company said it has made "major progress" toward eliminating Model 3 production bottlenecks.

The company said it will "continue to focus on quality and efficiency rather than simply pushing the highest possible production in the shortest period of time".

"Tesla is always a quarter away, and now you have to wait six months to get your report card on your investment thesis", Osborne said Wednesday.

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