Tesla passed its goal on the manufacturing of its Model 3, but is the pace sustainable?
Musk’s Model 3 promises finally fulfilled, but can he sustain it?
DETROIT — Tesla made 5,031 lower-priced Model 3 electric cars during the last week of June, surpassing its often missed goal of 5,000 per week. But the company still only managed to crank out an average of 2,198 per week for the quarter.
Tesla reported making 28,578 Model 3s from April through June, according to its quarterly production release on Monday.
The Model 3, which starts at $35,000, is the key to turning Tesla from a niche maker of expensive electric cars to a profitable, mass-market automaker. The company badly needs cash from the compact cars to deliver on CEO Elon Musk’s promise to post a net profit and positive cash flow in the third and fourth quarters.
The company has had only two profitable quarters in its 15year history.
To hit the 5,000-per-week mark, Tesla had to erect a second Model 3 assembly line under a tent outside its Fremont, Calif., factory, and Musk had to spend nights in the plant working out bugs with automation and other problems. Also Monday, Tesla confirmed that its chief engineer Doug Field, who took a break after Musk took over production responsibilities during the ramping up of the Model 3, is leaving the company.
The company now says it expects to hit 6,000 Model 3s per week by late August, with its Model 3 assembly line under the plant’s roof reaching 5,000 on its own.
“The last 12 months were some of the most difficult in Tesla’s history,” the company’s statement said. Hitting the 5,000 mark “was not easy, but it was definitely worth it,” the statement said.
Tesla critics now wonder if it can keep up the 5,000-per-week rate, and they question whether it can build high-quality vehicles underneath the heavy-duty tent on the site of what once was a joint-venture factory for General Motors and Toyota.
Dave Sullivan, manager of product analysis at AutoPacific Inc. and a former manufacturing manager for Ford Motor Co., said reaching the 5,000-perweek won’t make Tesla profitable by itself.
Sullivan predicted the company will have trouble sustaining it because parts suppliers will have difficulty keeping up and bottlenecks will develop in the body assembly and paint shops.
“They did everything they can to artificially pump up the third quarter,” Sullivan said. “I think the fourth quarter will be the quarter of reckoning.”