CEO Musk: Tesla hits weekly goal of mak­ing 5,000 Mod­els 3s

South Florida Times - - BUSINESS - By AP Auto Writer CEO Elon Musk

TOM KRISHER

Elec­tric car maker Tesla Inc. has de­liv­ered on its CEO's prom­ise to build a lower-priced car at a rate of 5,000 per week by the end of June.

CEO Elon Musk sent an email to com­pany em­ploy­ees Sun­day prais­ing them for pro­duc­ing 5,000 Model 3s, a com­pact car that's de­signed to shift Tesla from a niche man­u­fac­turer to a main­stream au­tomaker. Musk also said the com­pany had cranked out a com­bined 2,000 of Model S sedans and Model X sportu­til­ity ve­hi­cles, bring­ing over­all pro­duc­tion to a record 7,000 for the week.

“We did it!'' Musk wrote. “What an in­cred­i­ble job by an amaz­ing team.''

The e-mail was re­ported by the web­site Elec­trek, and the com­pany con­firmed its au­then­tic­ity.

Last sum­mer, when the first Model 3s be­gan rolling off the assem­bly line, Musk promised to build 5,000 per week by De­cem­ber and 10,000 per week in 2018. But he also warned at the time that Tesla was en­ter­ing at least six months of “man­u­fac­tur­ing hell'' as it tried to hit the tar­gets.

Dave Sul­li­van, man­ager of prod­uct anal­y­sis at the mar­ket re­search firm Au­toPa­cific Inc., wasn't im­pressed. “Reach­ing it is one thing,'' Sul­li­van said. “Con­sis­tently pro­duc­ing 5,000 per week with out­stand­ing qual­ity is an­other. I don't think pro­duc­ing 5,000 once is any­thing to get ex­cited about un­til it's re­peat­able.''

Model 3 sales are crit­i­cal to Tesla's fu­ture. The com­pany has never posted a full-year profit, and it burned through more than $1 bil­lion in cash in the first quar­ter. Wall Street in­vestors, who have pushed the com­pany's stock be­yond $340 per share, are grow­ing im­pa­tient with the losses.

Moody's In­vestor Ser­vice down­graded Tesla's debt into junk ter­ri­tory back in March, warn­ing that Tesla won't have cash to cover $3.7 bil­lion for nor­mal op­er­a­tions, cap­i­tal ex­penses and debt that comes due early next year. Tesla said cash from Model 3 sales will pay the bills and drive prof­its.

The com­pany reached 5,000 per week as Musk spent many nights in­side the Fre­mont, California, fac­tory that once be­longed to a joint ven­ture be­tween Gen­eral Mo­tors and Toy­ota. To quickly put an­other assem­bly line in place, Tesla built a large tent at the fac­tory site. Musk told in­vestors on a first-quar­ter earn­ings con­fer­ence call that the com­pany re­lied too heav­ily on au­to­ma­tion. It had to hire more peo­ple to work at the fac­tory.

Tesla said in April that it had about 450,000 or­ders for the Model 3. But some could be get­ting antsy, es­pe­cially those who want a price closer to the base of $35,000. Cur­rently Tesla is sell­ing only Model 3s that cost $49,000 to in ex­cess of $70,000.

Many have been wait­ing since March of 2016, when Tesla be­gan tak­ing or­ders with a $1,000 re­fund­able de­posit.

The com­pany also may have to deal with some safety is­sues. In­ves­ti­ga­tors from two fed­eral agen­cies are look­ing into five crashes of its ve­hi­cles, some in­volv­ing the semi­au­tonomous Au­topi­lot sys­tem or post-crash bat­tery fires that have been dif­fi­cult to ex­tin­guish.

But re­gard­less of those is­sues, Musk was in a cel­e­bra­tory mood Sun­day.

“I think we just be­came a real car com­pany,'' he wrote.

PHOTO COUR­TESY OF ELEC­TREK

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