Tesla fails to achieve Model 3 production milestone

Tesla Model 3 Production Is 84% Lower Than What Elon Musk Promised

Elon Musk had promised "above 1,500 cars" would be built and delivered in September, but the production-challenged automaker only managed less than a tenth of that number.

Just 260 examples of the Model 3 have been rolled out since production began in late July, through until September 30.

In a statement, Tesla said that it is significant to emphasize that there are no fundamental problems with the production of Model 3 or the supply chain. "Although the vast majority of production subsystems in the factory in California and Nevada Gigafactory can operate with higher load, commissioning some of them took longer than expected".

The bad news concerns the Model 3, Tesla's cheaper vehicle launched in July.

The company's quarterly production statement said that "Model 3 production was less than anticipated due to production bottlenecks".

We "maintain our more cautious ramp of Model 3 deliveries which fell below our Street-low estimate for the quarter".

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Tesla chief executive Elon Musk has his sights set on adding a commercial electric truck alongside his mass-market electric cars. Tesla said those vehicles would be counted in the third quarter. What is less clear is whether it will be able to break those bottlenecks soon enough to hit Musk's ambitious production goals for 2018.

The Model 3 has become Tesla's most anticipated vehicle, garnering hundreds of thousands of preorders due to its promise of a mid-30K base price and a range well over 200 miles, not to mention premium auto features and style. In the company's previous shareholder's letter, Tesla said it was confident it could produce 1,500 Model 3 cars in the third quarter.

Tesla said after market close on Monday it delivered 26,150 vehicles, up about 18% sequentially and about 5% year over year.

By 2018, Tesla says it will make 500,000 of all of its cars combined per year - up from the almost 80,000 it made last year.

It would be hard to overstate the importance of the Model 3 to Tesla's business. There have been reports that it may consider relaxing rules that require foreign automotive companies to have a local partner, potentially allowing Tesla to manufacture its vehicles in the country.

"There is some risk of micro-analyzing the monthly ramp of the Model 3", he wrote. While competition in the market is expected to heat up in the medium-term, with luxury brands such as Volvo, Mercedes, and Porsche all doubling down on their EV plans, Tesla's premium lineup may still have some scope for growth.

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