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Tesla Model 3 delays eroding chunks from Tesla profits

Tesla Model 3 delays eroding chunks from Tesla profits

AdminNovember 7, 20171min903

Tesla has been taking the world by storm with its range of innovative products. They have solar roof tiles and their ambitious space expedition is just years away. But, Tesla Model 3 has been giving Elon Musk nightmares of late. The plan was simple, have the production car available to the general public by 2018. Tesla estimated that they would be doing an average of 10,000 cars per week with production at their Gigafactory.

It’s was a statement by Elon Musk on 8th November during an investor conference briefing that got people worried. Elon Musk has been confident of having the Model 3 available to the market in 2018. The influential Tesla CEO was apprehensive when asked whether Tesla was still on course to deliver 10, 000 cars per week in 2018. He said due to ‘production delays’ at their Gigafactory, production of the model 3, will be cut by half to 5,000 cars per week and later in the first quarter of 2018.

Production problems at Gigafactory

This has raised concern amongst investors who are now not even sure whether the production car will be available in the market in 2018. Elon Musk blamed the hiccups on battery problems at their factory. He also claimed to be trying to overcome what he calls ‘production hell’ at the Gigafactory. This is a far cry from his previous statement in August where he was far much confident.

Issues have been raised concerning rumors that some processes in car production were been done by hand. This raises that question whether Tesla where over-optimistic with their 10,000 cars per week figure. The Model 3 was given to some Tesla employees to test drive it and some have reportedly complained of the car breaking down.

Model 3 plans to bring uncertainty to Tesla fortunes

Investors are questioning Tesla optimism of producing more than one million cars by 2022. Is it a figure that is just too high and unrealistic? Tesla competitors will be rolling out their own versions of electric cars in 2018 and it will be interesting to see whether Tesla will have resolved its issues by then. The BMW 3 series electric car has been one of Tesla’s competitors and the question is how these delays will affect Tesla profits. The Model 3 has been capital intensive with Tesla putting its Capex at 1 billion dollars in the fourth quarter. Tesla’s revenues have been on the steady rise, gaining 30 percent to stand at 3 billion dollars but their expenditure has also been very high.

It is yet to be seen whether Tesla will overcome its challenges and get the Model 3 in the market by 2018. What we do not know is whether there might be more surprises coming from their Gigafactory as the year comes to an end. Tesla will have to up their game and seal any loopholes in their manufacturing processes to ensure that no further hiccups are experienced. Elon Musk still remains an optimistic and he has often been seen spending a lot of time at Gigafactory, in an effort to save the model 3.

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