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Tesla finally hits target for weekly production on Model 3 cars

Tesla News South Africa

Posted Nov 25, 2019  
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Firm builds 5,000 in a week but critics are sceptical over whether feat can be replicated.

Tesla has finally hit its weekly target production rate of 5,000 of its “mass-market” Model 3 electric car thanks to a big tent.

Scraping in through Tesla’s latest self-imposed deadline of the end of the second quarter, the 5,000th Model 3 reportedly rolled off the production line at about 5am on 1 July in California, for a total of 5,031 Model 3s produced in seven days.

In an email sent to Tesla staff and obtained by electric car site Electrek, the chief executive, Elon Musk, said: “We did it! What an incredible job by an amazing team.”

Musk also revealed that the company produced 2,000 of its more expensive Model S and Model X cars, bringing the total number of cars produced to 7,000 in one week and triggering celebrations from workers across the company.

Tesla announced on Monday that it had produced 53,339 vehicles in the second quarter of the year up 55% on the first quarter, including 28,578 Model 3s and 24,761 of the more expensive Model S and X cars. The company said it had delivered 40,740 of those vehicles to customers in the second quarter, below some Wall Street expectations but enough to send Tesla shares climbing more than 5% in morning trading.

When the first Model 3s began rolling off the assembly line last summer, Musk promised to build 5,000 per week by December and 10,000 per week in 2018. But he also warned that Tesla was entering at least six months of “manufacturing hell” as it tried to hit the targets.

Production delays have caused Tesla to burn through at least $1bn (£760m) as it struggled to ramp up production. Having blamed delays on “excessive automation” and being forced to conduct several shutdowns to correct issues, Tesla built a large, semi-permanent tent at the factory to house another assembly line.

That extra line combined with improvements in production has worked for one week but analysts are sceptical as to whether the achievement is reproducible.

“Reaching it is one thing,” said Dave Sullivan, the product analysis manager at market research firm AutoPacific Inc. “Consistently producing 5,000 per week with outstanding quality is another. I don’t think producing 5,000 once is anything to get excited about until it’s repeatable.”

Brian Johnson, an analyst with Barclays, warned investors in March to be wary of brief “burst rates” of Model 3 production that were not sustainable. Tesla has been using temporary periods of fast-as-possible production called “burst builds” to estimate how many cars it is capable of building over an extended timeframe.

One Tesla worker told Reuters that to hit the 5,000-a-week target, staff from other departments were drafted onto the Model 3 production line and breaks were staggered to keep it constantly running.

Musk said that Tesla was targeting 6,000 Model 3s a week in the next month.

A production rate of 5,000 Model 3s per week is more than just a milestone for Tesla. Despite being lauded as Tesla’s mass market electric car costing $35,000, the cheapest models have yet to be produced. Only the long-range variant, which starts at $49,000, is available to the 450,000 people with Model 3 reservations.

Musk said that it would require “three to six months after [producing] 5,000 vehicles per week to ship the $35,000 Tesla” because “shipping the minimum cost Model 3 right away would cause Tesla to lose money and die”.

In the meantime, Tesla has concentrated on higher-end versions, including a new range-topping dual-motor performance version priced at $78,000, which has helped avoid even larger losses. However, the lower-priced model is considered crucial to ensuring Tesla becomes a mass market car company competing with Ford and VW, rather than a more niche electric car company competing with high-end manufacturers such as Porsche.

It’s not clear how many of the 450,000 who put down a $1,000 refundable deposit did so on the basis of the $35,000 asking price. Tesla recently opened up its order system to those in the US and Canada with Model 3 reservations. Buyers are required to make a further $2,500 deposit to place a full order and customise their vehicle, as the company requires for its other models.

The new deposits will provide a much-needed cash injection into the company to the tune of millions, depending on how many reservation holders go through with the purchase.

1Car South Africa

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