Tesla’s ramp-up of production for the entry-level Model 3 sedan may be going more slowly than expected.
The company will produce 5,000 of the vehicles in the fourth quarter, according to a new projection.
Meanwhile, another new report suggested that 2018 — and particularly Model 3 production during the coming year — will test the company’s leading position in the electric car world and play a strong role in whether investors keep putting money into the firm.
The Model 3, which at a starting price of $35,000 is intended to bring the Palo Alto electric car company into the mainstream auto market, has been plagued by delays. CEO Elon Musk in November confessed to analysts that the car’s production was some three months behind schedule.
Now, boutique investment bank KeyBanc Capital Markets is predicting fourth-quarter Model 3 production will amount to a paltry one-third of the bank’s earlier prediction of 15,000 vehicles produced in the period, Reuters reported Wednesday.
“The numbers indicate that the electric carmaker may still not be out of its self-described ‘manufacturing hell’ for the production of the … sedan,” according to Reuters.
Tesla did not immediately respond to a request for comment on the accuracy of KeyBanc’s prediction, or provide actual production numbers.
Tesla, whose vehicle models have all seen production delays, has in recent months put even more pressure on itself. It has promised not only to satisfy hundreds of thousands of would-be Model 3 owners, but also to produce a new electric semi truck in 2019 and ultra-fast new Roadster in 2020, along with starting to produce a “Model Y” compact SUV as early as mid-2019 and unveiling a pickup truck as soon as the end of next year.
Musk, in July, had said more than half a million prospective Model 3 owners had put down refundable deposits, and the company would “go through at least six months of manufacturing hell,” Reuters reported at the time.
KeyBanc said it talked to people at 18 U.S. Tesla stores, forcing the bank to revise its expected fourth-quarter Model 3 production estimate.
“We talked to stores in California doing as many as a dozen per week with around 10 being the average, and we estimate stores outside of California were doing something closer to half a dozen per week,” KeyBanc said in a note, according to Reuters.
In the third quarter, Tesla had fallen far short of its Model 3 production target, making just 260 instead of a planned 1,500, citing “production bottlenecks.”
In November, Musk admitted that it would likely take three extra months for the firm to start producing 5,000 Model 3s per week. The company would hit that level late in the first quarter, rather than in December, Musk said.
The Model 3 is crucial to Tesla, and 2018 may be a “make-or-break” year for the company, USA Today suggested Wednesday.
“Speeding the rollout of the mass-market Model 3 is essential to Tesla’s financial health after the company lost several million dollars per day in the third quarter in its rush to begin manufacturing,” according to the newspaper.
