Tesla’s Model 3 rolling off assembly line in larger volumes

Company experiencing delivery problems as it cannot deliver all the cars it is making to customers

Tesla brought the total number of Model 3 produced in the third quarter to over 51,000 vehicles. Photographer: Patrick T Fallon/Bloomberg

Tesla brought the total number of Model 3 produced in the third quarter to over 51,000 vehicles. Photographer: Patrick T Fallon/Bloomberg

 

Tesla said Tuesday that it produced 80,142 cars in the third quarter, a 50 per cent rise from the second quarter, as the Model 3 sedan began rolling off its assembly line in larger volumes.

The total included 53,239 Model 3s, nearly doubling the number Tesla made in the previous quarter. That implies that the company’s output averaged about 4,000 Model 3s a week, fewer than the 5,000 that Elon Musk, the chief executive, has been pushing for.

The increase in production is a rare bit of good news for a company that has been shaken by a succession of unsettling developments over the last two months.

The Model 3, its most affordable offering so far, is crucial to Tesla’s success. But while the company has increased the production of Model 3s, Tesla has run into a new problem: It cannot seem to deliver all the cars it is making to its customers. Mr Musk called this “delivery logistics hell”.

Analysts said a more important test would be whether Tesla could clear up its shipping issues in the fourth quarter.

“With production stabilised, delivery and outbound vehicle logistics were our main challenges during Q3,” the company said in a statement. “We made many improvements to these processes throughout the quarter, and plan to make further improvements in Q4, so that we can scale successfully.”

Bottom line

Mr Musk has vowed that Tesla will generate a profit and show positive cash flow in the third and fourth quarters thanks to the Model 3. But while the company is making more cars, the delivery problems could hurt its bottom line because the company can book revenue only when it puts its cars into customers’ hands.

The company needs revenue because it has suffered substantial losses and uses up nearly $1 billion in cash almost every quarter. At the start of the third quarter Tesla had $2.2 billion in cash, but it owed suppliers $3 billion. It also had about $11 billion in debt. – New York Times 2018