“Tesla Inc. produced 28,578 Model 3 electric sedans in the second quarter, almost three times as many as it made the previous quarter, the Elon Musk-led automaker announced Monday. Tesla, based in Palo Alto, has been under pressure to ramp up its production of the Model 3, the vehicle that is supposed to turn the company into a purveyor of affordable electric cars to the masses, but it has missed targets time and again. The company has never earned an annual profit.
Last month, the company cobbled together an additional production line in a tent on the grounds of its Fremont, Calif., factory, and it said that last week it finally hit its goal of making 5,000 Model 3 cars in a week. About 20% of the Model 3s made last week came from that new production line, with vehicle quality “as good as” that of vehicles coming off its other assembly lines, Tesla said.
Last quarter, the company said, it made more Model 3 cars than Model S sedans and Model X SUVs combined — the first time it has done so. The total number of vehicles produced by Tesla during the second quarter was 53,339, a 55% increase from the previous quarter, Tesla said. The company said it was the “most productive quarter in Tesla history by far.”
Tesla has not defined what it means by vehicles “produced.” For other automakers, “produced” means the moment a car exits the production line fully finished. But Musk, Tesla’s chief executive, used an unusual phrase in describing production numbers in an email to employees Sunday: “Not only did we factory gate 5000 Model 3’s, but we also achieved the S & X production target for a combined 7000 vehicle week!” his memo said.
The Times asked Tesla on Sunday what Musk meant by “factory gate.” The company did not respond. Anton Wahlman, a short seller betting that Tesla stock will drop, wonders whether there is rework to be done on “factory gate” Model 3s.
The company said Monday that the number of unfulfilled Model 3 vehicle reservations at the end of last quarter remained around 420,000, even though production has increased and Tesla already has delivered 28,386 of the cars.
“When we start to provide customers an opportunity to see and test drive the car at their local store,” the automaker said, “we expect that our orders will grow faster than our production rate.”
Tesla said Monday that it expects to increase production of its Model 3 vehicles to 6,000 cars per week by late next month. The company is still aiming to deliver a total of 100,000 Model S and Model X vehicles in 2018. As Tesla ramps up production, it is speeding toward a complication: Once an automaker sells 200,000 electric vehicles in the United States, a $7,500 federal tax credit for buyers of that company’s electric vehicles begins to phase out.
Tesla does not break out its vehicle sales figures by geography, but it is expected to hit that 200,000 point soon. When it does, buying a Tesla vehicle in the U.S. will become, in effect, more expensive, giving an edge to Tesla’s competitors.”
LA Times. 2 July 2018, http://www.latimes.com/business/