Tesla makes 5,000 Model 3s per week, but can it continue?

DETROIT — Tesla Inc. made 5,031 lower-priced Model 3 electric cars during the last week of June, surpassing its often-missed goal of 5,000 per week. But the company still only managed to crank out an average of 2,198 per week for the quarter.

Tesla reported making 28,578 Model 3s from April through June, according to its quarterly production release on Monday.

The Model 3, which starts at $35,000, is the key to turning Tesla from a niche maker of expensive electric cars to a profitable, mass-market automaker. The company badly needs cash from the compact cars to deliver on CEO Elon Musk’s promise to post a net profit and positive cash flow in the third and fourth quarters. The company has had only two profitable quarters in its 15-year history.

To hit the 5,000-per-week mark, Tesla had to erect a fourth assembly line under a tent outside its Fremont, California, factory, and Musk had to spend nights in the plant working out bugs with automation and other problems.

The company now says it expects to hit 6,000 Model 3s per week by late August, with its Model 3 assembly line under the plant’s roof reaching 5,000 on its own.

“The last 12 months were some of the most difficult in Tesla’s history,” the company’s statement said. Hitting the 5,000 mark “was not easy but it was definitely worth it,” the statement said.

Tesla critics now wonder if the company can keep up the 5,000-per-week rate, and they question whether the company can build high-quality vehicles underneath the heavy-duty tent on the site of what once was a joint-venture factory for General Motors and Toyota.

Dave Sullivan, manager of product analysis at the market research firm AutoPacific Inc. and a former manufacturing manager for Ford Motor Co., wasn’t impressed. “Reaching it is one thing,” Sullivan said. “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.”

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

On Monday, the company said it delivered 18,440 Model 3s during the quarter to help satisfy a waiting list that now is around 420,000. Some have been holding out for their cars since March of 2016 when the company first started taking orders. Another 11,166 Model 3s are en route to be delivered to owners, the company said.

Currently the cheapest Model 3 that can be ordered costs around $49,000, and they can run upwards of $70,000. The company hasn’t said when it will start producing the $35,000 version, which comes only in black unless a buyer pays more.

Tesla also said it delivered 10,930 Model S sedans and 11,370 Model X SUVs during the quarter.

Model 3 sales are critical to Tesla’s future. The company has never posted a full-year profit, and it burned through more than $1 billion in cash in the first quarter. Wall Street investors, who have pushed the company’s stock beyond $340 per share, are growing impatient with the losses.

Moody’s Investor Service downgraded Tesla’s debt into junk territory back in March, warning that Tesla won’t have cash to cover $3.7 billion for normal operations, capital expenses and debt that comes due early next year. Tesla said cash from Model 3 sales will pay the bills and drive profits.

Shares of Tesla Inc. fell 2.3 per cent to $335.26 in midday trading Monday. Analysts said investors had expected Tesla to reach the production target.

Musk told investors on a first-quarter earnings conference call that the company relied too heavily on automation. It had to hire more people to work at the factory.

The company also may have to deal with some safety issues. Investigators from two federal agencies are looking into five crashes of its vehicles, some involving the semi-autonomous Autopilot system or post-crash battery fires that have been difficult to extinguish.

But regardless of those issues, Musk was in a celebratory mood Sunday.

“I think we just became a real car company,” he wrote in a note to employees.

Just Posted

Central Alberta Archers Association: Proposed safe drug consumption service location puts youth at risk

Turning Point proposes second location for a permanent safe consumption service in Red Deer

Man dead following altercation at gas station on Sunchild First Nation

Rocky Mountain RCMP say victim succumbed to injuries in hospital

UCP member apologizes for ‘unintentionally’ comparing pride flag to swastikas

A member of Alberta’s United Conservative Party is apologizing for making what… Continue reading

Crowd watches as backhoe rips into mangled plane after Halifax runway overrun

HALIFAX — Crews have begun tearing into the mangled Boeing 747 cargo… Continue reading

Grim search for more fire victims, 31 dead across California

PARADISE, Calif. — The death toll from the wildfire that incinerated Paradise… Continue reading

Updated: Red Deer RCMP introduce downtown policing unit

A four-member downtown Red Deer RCMP unit hit the beat on Thursday… Continue reading

Comic book genius Stan Lee, Spider-Man creator, dies at 95

LOS ANGELES — Stan Lee, the creative dynamo who revolutionized the comic… Continue reading

Canada intelligence officials have heard audio of Khashoggi murder, Trudeau says

PARIS — Justin Trudeau says Canadian intelligence officials have listened to a… Continue reading

Canada hoping to solve U.S. tariff dispute by G20 meetings at month’s end: PM

WASHINGTON — Prime Minister Justin Trudeau says he’s hopeful that Canada can… Continue reading

Bishops will delay votes on steps to combat sex abuse crisis

BALTIMORE — In an abrupt change of plans, the president of the… Continue reading

Man at centre of Nobel body scandal tests rape conviction

STOCKHOLM — The man at the centre of the scandal at the… Continue reading

Chinese premier urges guard of free trade on Singapore visit

SINGAPORE — Chinese Premier Li Keqiang stressed the need for free trade… Continue reading

50 countries vow to fight cybercrime – US and Russia don’t

PARIS — Fifty nations and over 150 tech companies pledged Monday to… Continue reading

More women in poor countries use contraception, says report

KIGALI, Rwanda — More women and girls in poor countries are using… Continue reading

Most Read