Executive Briefings

Tesla on Slow Road Out of 'Hell' As It Drops Model 3 Output Goals Again

Tesla delivered just 1,550 of its new Model 3 sedans in the fourth quarter and pared its output target for the current quarter, justifying Elon Musk’s warning that reaching high-volume production for the electric car would be "hell" for the foreseeable future.

Tesla on Slow Road Out of 'Hell' As It Drops Model 3 Output Goals Again

Production of the Model 3, nominally priced from $35,000 before options, was 2,425 units in the year's final three months, up from a mere 260 in the third quarter. While the company has said that about a half-million customers are waiting for the car, as of the end of 2017, it had delivered just 1,770, including previously released figures.

Tesla now expects to be building the Model 3 at a 2,500-unit weekly pace by the end of the current quarter, down from a 5,000-unit goal set in November, a pace it doesn't expect to reach until the end of the first half. The company had earlier sought to reach the weekly 5,000-unit target by the end of 2017.

“Tesla would have been better served had it not announced such lofty plans for its production ramp-up," Michelle Krebs, executive analyst for Autotrader, said in emailed comments. "The company has now said it is focused on quality versus volume, which is the right focus. The Model 3 must be right in terms of quality. Ramping up production levels with a flawed product is foolish.”

Tesla shares dropped $6.45, or 2 percent, to $310.80 after the close of primary trading. They dipped 1 percent, to $317.25, before the delivery and production figures were released on Wednesday.

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Production of the Model 3, nominally priced from $35,000 before options, was 2,425 units in the year's final three months, up from a mere 260 in the third quarter. While the company has said that about a half-million customers are waiting for the car, as of the end of 2017, it had delivered just 1,770, including previously released figures.

Tesla now expects to be building the Model 3 at a 2,500-unit weekly pace by the end of the current quarter, down from a 5,000-unit goal set in November, a pace it doesn't expect to reach until the end of the first half. The company had earlier sought to reach the weekly 5,000-unit target by the end of 2017.

“Tesla would have been better served had it not announced such lofty plans for its production ramp-up," Michelle Krebs, executive analyst for Autotrader, said in emailed comments. "The company has now said it is focused on quality versus volume, which is the right focus. The Model 3 must be right in terms of quality. Ramping up production levels with a flawed product is foolish.”

Tesla shares dropped $6.45, or 2 percent, to $310.80 after the close of primary trading. They dipped 1 percent, to $317.25, before the delivery and production figures were released on Wednesday.

Read Full Article

Tesla on Slow Road Out of 'Hell' As It Drops Model 3 Output Goals Again