Tesla has announced some numbers for delivered Model 3 cars during Q4 2017 and they missed their goal by a lot. Wall Street expected Tesla to ship 2,917 Model 3 cars during the quarter. Tesla only managed to ship 1,550 units during that three-month period.
Tesla managed to produce only 2,425 Model 3 cars in that same quarter. Elon Musk had boasted last summer that Tesla would deliver 20,000 Model 3 cars monthly by December. Tesla clearly vastly overestimated its Model 3 manufacturing capability.
Production Challenges and Bottlenecks
Tesla did note that it made as many Model 3 cars by December 9 as it had in the previous four months combined. This indicates that the company faced significant production challenges and bottlenecks earlier in the year. These issues ranged from problems with the automation of the production line to supply chain constraints. Tesla has been known for its ambitious goals, but the complexity of scaling up production for a mass-market vehicle like the Model 3 proved to be more challenging than anticipated.
One of the major hurdles was the “production hell” that Elon Musk frequently mentioned. The company had to deal with issues related to the Gigafactory, where the batteries for the Model 3 are produced. Any delay in battery production directly impacted the overall output of the Model 3. Additionally, the Fremont factory, where the final assembly takes place, faced its own set of challenges, including the integration of new manufacturing technologies and processes.
Impact on Tesla’s Market Performance
The low deliveries sent Tesla shares down 1%. This dip in stock price reflects investor concerns about Tesla’s ability to meet its ambitious production targets. Wall Street analysts have been closely monitoring Tesla’s performance, and missing delivery targets by such a significant margin raised questions about the company’s long-term viability and its ability to compete in the increasingly crowded electric vehicle market.
However, it’s worth noting that despite these setbacks, Tesla has a history of overcoming production challenges. For instance, the Model S and Model X also faced initial production issues but eventually became successful. Investors and customers alike are hopeful that Tesla will resolve these issues and ramp up production to meet the high demand for the Model 3.
Tesla’s explanation for the low deliveries was that many of the cars had just been built and were not delivered before the quarter ended. This suggests that while production was ramping up, the logistics of delivering the vehicles to customers were still catching up. The company has since taken steps to improve its delivery process, including opening new delivery centers and streamlining the handover process to customers.
Moreover, Tesla’s focus on vertical integration, where it controls multiple stages of the production process, from battery manufacturing to vehicle assembly, is aimed at reducing dependency on external suppliers and improving overall efficiency. This strategy, while challenging to implement, could pay off in the long run by allowing Tesla to better control its production timelines and costs.
In conclusion, while Tesla missed its Q4 2017 Model 3 delivery targets by a significant margin, the company has shown resilience in the face of production challenges. The lessons learned from these early setbacks are likely to inform future production strategies, helping Tesla to better meet its ambitious goals. Investors and customers remain cautiously optimistic, keeping a close eye on Tesla’s progress in the coming quarters.
via Business Insider
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