Tesla's cheaper electric auto the Model 3 struggling

Phillip Butler
January 6, 2018

Tesla ended September with about US$3.5b cash in hand and projected another $1b in capital expenditures during the last three months of the year.

Robert W. Baird & Co. analyst Ben Kallo said he sees Tesla having enough cash and additional liquidity sources to get through the revised 5,000-a-week schedule, meaning no capital raise will be required in the first half of this year.

Tesla shares were down 3 percent Thursday morning. The new Model 3, crucial to the company's success, won't hit full-scale production until the end of June, Tesla said Wednesday - almost a year after the company began manufacturing the vehicle in small numbers.

While investors certainly won't look at another Model 3 production delay favorably, they may at the very least find solace in the fact that interest in the Model S and Model X is higher than it's ever been. During the company's third quarter, Tesla manufactured 260 Model 3s.

As a result, now that owners have their cars and can do what they want with them, some of them are trying to make a little side cash on Turo, a website where owners can rent their cars out for a daily fee. While a capital raise may not be required, Tesla lacks "a ton of wiggle room" and should seek more cash to mitigate risks, he wrote. Analysts had expected 4,100 Model 3 sedans to be delivered in the fourth quarter, according to financial data and analytics firm FactSet.

"We're also very appreciative of our Model 3 customers, who continue to stick by us while patiently waiting for their cars".


On Dec. 3, Tesla announced it had only delivered 1,550 vehicles during the fourth quarter of 2017.

Tesla said on Wednesday its production rate had increased significantly despite the delays.

The Elon Musk-led company now expects to assemble 5000 Model 3s a week by the end of June, delaying plans to reach that milestone by another three months. A conventional auto factory operating at full speed on two shifts can churn out almost 1,000 vehicles a day.

Production, however, hit snags during a period of "manufacturing hell" Musk first warned of in July.

Serious problems turned up last summer at both the company's Fremont, Calif., auto assembly plant and its "Gigafactory" battery plant in Nevada that put the company in what Musk called "production hell". After selecting the Model S Sedan with a 100 kWh battery, Tesla's trip planner tells me the 12-hour trip will be broken up by a 20 minute charge in Bourges, a 25 minute pit stop in Clermont-Ferrand, a 40 minute charge in Albaret-Sainte-Marie and then one last 40-minute top-up in Narbonne before hopping over the border to Barcelona. At some later point this year, Tesla said earlier, it should ramp up production to 10,000 Model 3s weekly.

Other reports by Ligue1talk

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