Tesla manufactures 5,000 models 3 per week, but can it continue?

by TOM KRISHER, AP Auto Writer

ARCHIVE- In this file photo of May 27, 2018, a Model 3 sedan from 2018 is located at a Tesla dealership in Littleton, Colorado. Tesla Inc. made 5,031 model 3 lower priced electric cars during the last week of June, surpbading its often lost goal of 5,000 per week. Tesla reported that it made 28,578 models 3 from April to June, according to its quarterly production release on Monday, July 2. (AP Photo / David Zalubowski, Archive)


Tesla Inc. performed 5,031 fewer. He loaded the Model 3 electric cars during the last week of June, surpbading his goal of 5,000 per week that is often lost. But the company only managed to generate an average of 2,198 per week for the quarter.

Tesla reported having manufactured 28,578 models 3 from April through June, according to its quarterly production release on Monday.

Model 3, which starts at $ 35,000, is the key to converting Tesla from an expensive electric car niche manufacturer to a mbadively profitable carmaker. The company urgently needs cash from compact cars to deliver on the promise of CEO Elon Musk to record net profit and positive cash flow in the third and fourth quarters. The company has only had two profitable quarters in its 15 years of history.

To reach the 5,000 mark per week, Tesla had to erect a second Model 3 badembly line under a tent outside his factory in Fremont, California, and Musk had to spend nights at the plant solving errors with automation and other problems.

The company now says it expects to reach 6,000 3 models per week by the end of August, with its Model 3 badembly line under the roof of the plant reaching 5,000 in its own.

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

Tesla's critics now question whether the company can maintain the rate of 5,000 per week, and question whether it can build high values. quality vehicles under the tough tent on the site of what was once a joint factory for General Motors and Toyota.

Dave Sullivan, product badysis manager at market research firm AutoPacific Inc. and former manufacturing manager of Ford Motor Co., said reaching 5,000 per week will not make Tesla profitable on its own. He predicted that the company will have problems maintaining the rate because the parts suppliers will have difficulty maintaining themselves and bottlenecks will develop in the badembly and painting workshops.

CFRA Research badyst Efraim Levy lowered his Tesla stock rating from "Hold" to "Sell," saying he does not see the production rate as "operationally or financially sustainable" in the short term. But eventually he expects it to rise. Even so, the stock is priced above its target price of $ 300, so it recommends selling it, he wrote Monday in a note to investors.

Tesla Inc. shares fell 2 percent to 336.46 on Monday afternoon.

Last summer, when the first Models 3 started rolling on the badembly line, Musk promised to build 5,000 per week in December and 10,000 per week in 2018. But he also warned at the time that Tesla was entering at least six months of "Fabrication hell."

On Monday, the company said it delivered 18,440 models 3 during the quarter to help meet a waiting list that now stands at around 420,000. Some have been waiting for their cars since March 2016 when the company began receiving orders. Another 11,166 models 3 are on their way to be delivered to the owners, the company said.

Currently, the cheapest model 3 that can be ordered costs around $ 49,000, and can cost more than $ 70,000. The company has not said when it will start producing the $ 35,000 version.

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 the future of Tesla. The company consumed more than $ 1 billion in cash in the first quarter. Wall Street investors, who have pushed the company's shares beyond $ 340 per share, are increasingly impatient with losses.

Moody & # 39; s Investor Service lowered Tesla's debt in junk territory in March, warning that Tesla will not have cash to cover $ 3.7 billion for normal operations, capital expenditures and debt that expires at the beginning of the year. next year. Tesla said that the cash from Model 3 sales will pay the bills and generate profits.

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

But in spite of those problems, Musk was in a festive mood on Sunday.

"I think we've just become a real car company," he wrote in a note to employees.


AP Business Writer Paul Wiseman contributed to this story.


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