Cars and Drivers

Are Tesla's Production Troubles Worse Than It Claims?

Paul Ausick

Published: October 7, 2017 9:45 am

Last Updated: January 12, 2020 7:25 am

When Tesla Inc. (NASDAQ: TSLA) reported new car deliveries last week, the company revealed that its total included just 260 of its recently introduced Model 3 sedan. In the announcement Tesla said there were “no fundamental issues with the Model 3 production or supply chain” and that the production “bottleneck” would soon be cleared up.

It may not be that simple. Late Friday, The Wall Street Journal reported that as recently as early September, “major portions” of the Model 3 were still being built by hand, not on the automated production line, citing “people familiar with the matter.”

A company statement essentially adopted President Trump’s charge of “fake news” in response to the report:

For over a decade, the WSJ has relentlessly attacked Tesla with misleading articles that, with few exceptions, push or exceed the boundaries of journalistic integrity. While it is possible that this article could be an exception, that is extremely unlikely.

The Wall Street Journal’s sources say that Tesla is weeks late in finishing the manufacturing systems to build the Model 3.

That delay ripples through the mass production process that Tesla CEO Elon Musk has said will be producing 5,000 vehicles a week by next year.  The Wall Street Journal cited Doug Betts, senior vice president of J.D. Power,  who noted that most carmakers “celebrate” the beginning of production after around six months of running the line to build a few hundred vehicles. Betts noted, “You’re not really improving the final process if you’re not running on it. Problems can only be solved once they are found.”

One further effect of the production problems with the Model 3 is a further delay in the announcement of Tesla’s semi-truck. The introduction originally had been scheduled for last month, then moved to October 26, before Musk tweeted Friday that the introduction has been delayed further, until November 16, in order “to fix Model 3 bottlenecks” and to produce more batteries to help out with Puerto Rico’s recovery from the damage caused by Hurricane Maria.

Tesla stock closed up about 0.4% on Friday, at $356.88, in a 52-week range of $178.19 to $389.61. The 12-month consensus price target on the stock is $318.63.

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