Is Tesla Missing Model 3 Production Goals?

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There are rumors, almost every day, about whether Tesla Inc. (NASDAQ: TSLA) has been able to meet ambitious goals for production of its new Model 3. The company set a benchmark of 5,000 a week, which it reached. This is supposed to ramp to 10,000 next year. In the meantime, at least one report claims Tesla’s production of the car is underperforming.

Website Electrek reports:

Tesla has been aiming for a production rate of 6,000 Model 3 vehicles per week by the end of August and an overall production of 50,000 to 55,000 Model 3 vehicles throughout the third quarter.

Electrek has learned that the automaker missed the 6,000 unit production rate goal, but Tesla is nonetheless on track for its overall third quarter goal.

It is a “good news, bad news” report. Tesla Model 3 production has been slowed by supplier problems and factory choke points. This means that production could slow at any moment. A miss of 6,000 risks a longer period of below-expectation output.

The Model 3 is widely viewed as the most important building block for Tesla’s future. Its Model S and Model X have sticker prices well above $80,000. One version of the Model S has a price of over $125,000. The Model 3 is meant to be an “affordable” electric car with a base price of $37,100. This figure is misleading, however. It includes fuel savings and incentives. A more accurate estimate of the base price is $49,000 for a rear-wheel-drive version of the Model 3. A dual-motor all-wheel drive version has a base price of $64,000.

While the current prices of the Model 3 are well above $35,000, Tesla CEO Elon Musk says production of this lower priced version of the Model 3 would cause losses the company cannot support today. That does not prevent the supposition that consumers will buy the Model 3 in large numbers, which will in turn cause Tesla’s revenue to spike next year.

Has Model 3 production missed Tesla’s goals? It depends on who is answering.

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