Featured Image for Tesla admits shortfall as Model 3 struggles in “production hell”

Tesla admits shortfall as Model 3 struggles in “production hell”

Elon Musk is busier than any of us can imagine, but he has developed a habit of coming up with over-ambitious goals.

Tesla released its 2017 fourth quarter report last week and admitted that it had delivered a total of 1,550 Model 3s in the quarter, just over half of the 2,917 that were promised.

According to the report, there are currently 860 Model 3s in transit to owners but they will be counted as quarter one 2018 deliveries.

On top of the shortfall, Tesla announced that it burned through US $1.1 billion in the quarter.

The mass market Tesla 3 sedan, which is priced at US $35,000, is meant to mark Tesla’s entry into the mainstream. As noted by Business Insider, the Model 3 is essentially an electric (and very fast) Honda Accord and Honda can smash out 100,000 Accords a year, no probs.

Musk has the lofty and admirable goal of revolutionising pretty much every industry he touches. In addition to spearheading an electric vehicle movement, he wants to change public transportation and solar energy and get us to Mars. It’s a lot of things.

Around 400,000 people have paid US $1,000 to get on the Model 3 waitlist, so demand is not the issue here. Tesla simply needs to make more cars. Easier said than done.

Musk has described the Model 3 as being in “production hell”, with many of the issues stemming from the batteries modules. Wired reports that due to an outside supplier messing up, Tesla was forced to assemble batteries in-house.

“We had to rewrite all of the software from scratch and redo many of the mechanical and electrical elements,” Musk said.

“This is what I’ve spent many a late night at the gigafactory working on.”

This has led to Musk even camping on the roof of the factory, seen here enjoying some Johnny Cash, whiskey and smores:

Whiskey, fire, s’mores and JC Also, hotdog or not hotdog?

A post shared by Elon Musk (@elonmusk) on

The good news is that production speeds are increasing and Tesla now says that it aims to build 2,500 Model 3s per week by the end of the first quarter and 5,000 a week by the end of the second quarter 2018.

Also good was the fact that Tesla ended 2017 with the all-time best quarter for combined Model S and X deliveries with a 33% increase over 2016’s numbers.

Tesla may have some cashflow problems, but the Model 3 delays are unlikely to ruin the company. At the time of writing, the share price is down a little but still holding around the US $300 mark and analysts remain optimistic.

“Importantly, we believe that Tesla is prioritising quality control. While Tesla’s repeated guidance revisions could begin to risk damaging its elite brand, a mass-recall would probably be far more damaging,” said Nomura Instinet analyst Romit Shah in a research note.

Musk may have trouble keeping some of his promises, but South Australians won’t forget that he was able to keep one important one last year by delivering the world’s biggest battery to the state, on schedule.

He’s not perfect, but he’s pretty damn brilliant and Earth needs him.

About the author

Stefan is an Adelaide-based freelance writer. In his spare time, he plays tennis badly, collects vinyl and brushes up on his Mandarin. Follow Stefan on Twitter

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