Elon Musk warned that ramping up supplies of Tesla’s new Model 3 sedan would be “manufacturing hell” as the company raced to fill about a half million orders for it as quickly as possible. Quarterly production and delivery figures underscore that challenge as Tesla missed Musk’s initial target.
Tesla delivered 26,150 of its namesake battery-powered cars and utility vehicles in the third quarter, of which just 220 were Model 3s. The first 30 units of that car, nominally priced at $35,000, were handed over to customers – all Tesla employees – at a ceremony its Fremont, California, factory in July. Musk had set a goal of producing at least 1,500 Model 3s in September alone and a target of building 20,000 in December.
Tesla said Model 3 production was below expectations “due to production bottlenecks,” that it didn’t specify. “Although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected,” the company said in a statement on Monday.
“Production grows exponentially, so Aug [sic] should be 100 cars and Sept about 1500,” Musk said via Twitter in July. “Looks like we can reach 20,000 Model 3 cars per month in Dec.”
A few weeks after that he warned at a press briefing on July 28 at Fremont that ramping up production would be tough and that Tesla would “go through at least six months of manufacturing hell.” He wasn’t kidding.
Musk estimated in July that Tesla had about half a million reservations for the car. It requires would-be buyers to put down a $1,000 deposit to hold a place in line.
In an August earnings call, Musk reiterated his expectations about Model 3 production.
“We are confident we can produce just over 1,500 vehicles in Q3, and achieve a run rate of 5,000 vehicles per week by the end of 2017,” Musk said. “We also continue to plan on increasing Model 3 production to 10,000 vehicles per week at some point in 2018.”
While Model 3 is to have a $35,000 base price, Tesla currently makes only a version with a longer-range battery pack that starts at $44,000. With options, including colors other than black, a higher-grade audio system, bigger wheels, better interior and the Autopilot semi-autonomous driving system, Model 3s cost close to $60,000 before taxes, and federal and state incentives.
The company said that third quarter deliveries for the Model S and Model X were the best ever, at 14,065 and 11,865 units, respectively. Total production in the third quarter that ended Sept. 30 was 25,336 vehicles, including 260 Model 3s.
“It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,” Tesla said. “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.”
Source: Forbes Tech