Tesla Model 3 Production May Take Longer - Analysts

Tesla has announced a production target of 5,000 Model 3 sedans per week by the end of 2018’s second quarter. However, analysts believe that it may take longer than predicted.

“If they say summer, I would add three months to it,” said Jamie Albertine of Consumer Edge, a research company.

“They’re doing something that is incredibly difficult: building the machine that makes the machine—one of the most automated assembly lines in the history of the global auto industry,” said Albertine.

He also added that Tesla was producing the Model 3 at an increasingly rapid rate along with placed quality controls.

Tesla Chief Executive Officer Elon Musk previously wrote a fourth-quarter letter to investors and declared plans of producing 2,500 Model 3 sedans by the end of the then incoming quarter. However, the automotive company failed to reach the target and only made 2,020 Model 3s by the final week of the 2018’s first quarter.

Investors didn’t seem to be shaken. Share prices climbed around 7 percent before the opening bell. If Tesla manages to reach its target, it wouldn’t have to raise more capital this year.

Still, the company has already missed targets, sparking doubts among investors and market watchers.

“We have a great deal of skepticism about the targets that they put out,” said Colin Rusch, the managing director and senior research analyst at Oppenheimer & Co.

Even though he claimed that the 2,000-plus vehicles that Tesla produced last week were a “great accomplishment,” he also said that he didn’t “see any reason to suggest that they’re out of the woods either.”

Rusch added that among the challenges that the company may have to continue facing is the cell production of battery packs and automation for the Model 3 assembly.

“Even if they’re able to cobble together a couple of good weeks, that doesn’t mean that the sustainable run rate will continue,” he said.

Tesla has built 34,494 vehicles during this year’s first quarter. Among those vehicles, 9,766 were Tesla Model 3s.

The first quarter-quarter deliveries of the three Tesla models also reached a record with 29,980 vehicles. Among those, 11,730 were Model S, 10,070 were Model X, and 8,180 were Model 3.

Even so, March is running as Tesla shares’ second worst performing month. They were down 36 percent since September 2017, when they set a record high of $389.61.

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