Published: Wed, October 04, 2017
Research | By Derrick Holloway

Tesla Misses Model 3 Production Goal Over 'Bottleneck'

Tesla Misses Model 3 Production Goal Over 'Bottleneck'

Blankenship, who also served as VP of retail at Apple for fix years before joining Tesla from 2010 to 2013, points to the full ecosystem that Tesla is building as proof of his point. The company experienced manufacturing process and supply issues on the Model X that meant it undershot volume targets initially.

The Model 3's price ranges from $35,000 to near $60,000, before rebates. The primary reason, it would seem, is bottlenecking - and a "handful" of manufacturing systems at both their Nevada Gigafactory and California auto plant "have taken longer to activate than expected".

Production ramp-up has always been a weak spot for the company, and, in 2015, the Model X exposed Tesla's struggles with quality control most clearly. Tesla predicted annual production would climb over the next few years to more than 500,000 vehicles. Relax, people - Elon has got this.

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Given a somewhat patchy history when it comes to hitting targets or earnings forecasts, this will no doubt come as good news to many Tesla investors-although, to be fair, they rarely display noticeable concern about such things.

Musk and his employees know they have a hard task ahead of him. "In our opinion, quality and attractiveness of early production is far more important than the quantity delivered - at least for now. You've been through this", he added.

In 2018, it hopes to increase production of the vehicle to over 10,000 a week and have an annual target of half a million Model 3s being produced.

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Given the number of preorders, Musk must hope that customers waiting on delivery of a Model 3 don't take these appearances to heart. "Automotive gross margin estimates for the quarter given worse utilization on Model 3 and likely lower margin Model S/X sales", he wrote. A special evening launch event held by Tesla was powered entirely with the company's stationary energy storage solutions. Shortly after its reveal, Tesla claimed that it had taken 325,000 Model 3 reservations, and the original plan was to produce about 10,000 cars per week in 2018. The total figure included 14,065 units of the Model S and 11,865 of the Model X. Deliveries in Q3 rose 4.5% year-on-year, and 26,150 units is also 17.7% up on the previous quarter.

As for the other two Tesla variants - Model S and Model X - the company achieved its "all-time best quarter" in terms of deliveries. The machinery to build the cars wasn't even installed until this spring.

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