Is Tesla Missing Model 3 Production Goals?

By Douglas A. McIntyre Updated Jan 11, 6:28PM EST · Published Sep 4, 6:15AM EDT

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Is Tesla Missing Model 3 Production Goals? — © Courtesy of Tesla

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.

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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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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.