Can Elon Musk finally fulfill one of his big promises for Tesla's Model 3?
Electric vehicle manufacturer's first mass production vehicle is no match for ambitious production After missing out on two previous production targets, Musk told investors that the company would make 5,000 models 3 per week at this time of the year.
He originally promised Tesla [1
Then he quit the pledge and said that Tesla would produce 2500 per week by the end of the first quarter, on the way to 5,000 a week by the end of June. Also in the seven days before the report on the production level of April 3, 2,020 buildings were built.
The production goals are more than just a matter of pride; They are crucial for Tesla to become sustainably profitable.
Tesla has a waiting list of about half a million customers who bought $ 1,000 for a Model 3. But the first quarter ended with less than 10,000 cars. Tesla gives some people who make deposits the opportunity to order options for their cars – but they have to pay an additional $ 2,500 on the purchase price. And they still do not get a fixed date when their car will be ready.
It has reported only two profitable quarters in eight years as a corporation, and it has enough debt to repay later this year that critics are worried that it would hit a cash crisis. It may need to borrow much more money or sell additional stock to finance its operations.
Moody's, who downgraded his credit rating to junkbond status earlier this year, estimates that Tesla will have to raise up to $ 2 billion – even if the company achieves its goal.
But Musk still insists that he will reach the goal of 5000 model 3s a week, and that will give the company enough sales and profits to make it unnecessary to raise more money.
Related: Elon Musk tells his shareholders Tesla will not run out of money
Some analysts believe he will reach the 5,000 goal goal. However, Goldman Sachs analyst David Tamberrino, who has a sell recommendation for the stock, wondered if Tesla would be able to maintain that level production.
Tesla did not respond to a request for comment on his current production status.
The company built an additional assembly line in a huge tent outside the factory in Fremont, California.
Musk lives essentially in Tesla's factories – the Fremont factory, where cars are assembled, and the Nevada "Gigafactory", which produces the lithium-ion batteries. An interview with him interviewed recently in the Wall Street Journal described how he wore the same Tesla T-shirt for three days and slept under his desk.
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He had some controversial months at Tesla sparring with stock analysts on the last investor call in May and vowed to create a new service rates the credibility of media he believes are treating him unfairly and mocks the critics on Wall Street, who wonder if he would finally reach the goals to justify the high valuations of the stock.
For a while, investors seemed to have parted ways with Musk and Tesla. After bottoming out last September, the stock lost about a third of its value and fell to a 52-week low in April, just ahead of its [19659-04] production report on Model 3. But Musk's assurance that Production is on track and that the company will finally be profitable in the second half of this year has helped to increase the value of the stock. Stocks have recovered more than three quarters of their lost value.
– CNNMoney Jackie Wattles Contributed to This Report
CNNMoney (New York) First published on June 29, 2018: 7:02 AM ET