Tesla shares were up by as much as 6 percent following the company’s announcement today (July 2) that it had not only surpassed the production milestone of 5,000 Model 3 units, but also the Model S and Model X production targets, churning out a combined 7,000 vehicles in a week.
“We did it!!” Musk wrote in his email to Tesla employees, applauding their hard work and contribution in achieving what was considered almost impossible, as recently as a month, or so, ago.
“What an incredible job by an amazing team. Couldn’t be more proud to work with you. It is an honor,” he said.
“The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible,” he added.
The billionaire CEO of Tesla and Space X continued:
“The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible. Intense in tents. Transporting entire production lines across the world in massive cargo planes.
Whatever. It worked. Not only did we factory gate over 5000 Model 3’s, but we also achieved the S & X production target for a combined 7000 vehicle week!”
Tesla’s initial plan of achieving the Model 3 target numbers in December 2017 did not come about, as the company, by its own admission, found itself mired in a “production hell,” managing a production rate of only 3,600 cars a week, way short of its intended goal.
Musk had attributed the Model 3 production hiccups to automation, a couple of months ago, admitting that humans were the answer to Tesla’s production woes.
When asked if robots were the reason behind the poor production numbers, Musk said, “Yes, they did … We had this crazy, complex network of conveyor belts … And it was not working, so we got rid of that whole thing.”
The very next day, Tesla temporarily halted the Model 3 production in a bid to improve its production performance by enhancing automation and removing bottlenecks – a move which was in stark contrast to what Musk had said a day earlier about humans being the answer to production issues.
Not having met its last quarter target in 2017, Musk and company went full steam ahead to achieve its new goal of reaching the magical number of 5,000 Model 3s a week by the end of the second quarter this year, which ended yesterday and the result of all the sweat and sacrifice is there for the world to see.
Talking of sacrifices, Musk led by example through those difficult times, moving his office to the factory floor where he even celebrated his 47th birthday.
Well, all that is in the past now and the company has every reason to celebrate the commendable feat, something which was not considered possible even as recently as a month ago.
The second quarter of 2018 was what Tesla calls “the most productive quarter in Tesla history by far,” as the company managed to record a 55 percent jump in production from the previous quarter, rolling out a total of 53,339 vehicles during this period.
Included in that figure are 28,578 Model 3 sedans – that’s three times the Model 3s produced in the first quarter – and a combined total of 24,761 Model S and Model X cars.
A total of 40,740 vehicles were delivered in this past quarter, including 18,440 Model 3, 10,930 Model S, and 11,370 Model X cars, which according to Wall Street estimates fell short of expectations.
While the second-quarter delivery data is not very encouraging, as far as analysts and investors are concerned, what’s boosting the Tesla shares is the Model 3 numbers.
It remains to be seen if Musk and his Tesla crusaders can maintain the punishing pace of the last quarter to achieve the CEO’s key goal of making the company cash flow positive in the remaining half of 2018, “despite negative pressures from a weaker [U.S. dollar] and likely higher tariffs for vehicles imported into China as well as components procured from China.”
Becoming cash flow positive is a critical step toward Tesla’s profitability, considering the company has recorded just two profitable quarters since it went public eight years ago.
Tesla is now looking to work its way up to producing 6,000 Model 3 units a week, sometime by late August.
In May, amid all the production chaos Musk was having to contend with, he announced two new variants of the Model 3 – the dual-motor, all-wheel drive (AWD) Model 3, as well as the Performance version, which Musk said is capable of zero to 60mph in just 3.5 seconds.
While the single motor rear-wheel-drive base model option remains, you can opt for an upgraded version at an additional $5,000, which will not only give you AWD, but also an improved range of 310 miles and a zero to 60mph time of 4.5 seconds, with a top speed of 140mph.
To put that in perspective, the base Model 3 has a maximum range of 220 miles and its stationary to sixty miles per hour time is 5.6 seconds.
The $78,000 Performance version of the Model 3 is not only set to give the BMW M3 a run for its money – in terms of speed and handling – but is good enough to “beat anything in its class on the track,” claimed Musk, which is, indeed, a tall claim to make, considering the fact that the M3 is quite a gladiator in the sports sedan arena.
One thing is for sure, though; the Model 3 is not going to be the fastest car out of the Tesla stable, as the Model S P100D can do zero to sixty miles per hour in a snappy 2.5 seconds, while the $200,000 Tesla Roadster promises the same acceleration in a snappier 1.9 seconds, but we’ll have to wait for that, as production is yet to start.