Cars and Drivers

Is Tesla Missing Model 3 Production Goals?

Douglas A. McIntyre

Published: September 4, 2018 6:15 am

Last Updated: January 11, 2020 6:28 pm

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.

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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.