Published: Tue, July 03, 2018
Finance | By Kristine Clayton

Tesla makes 5000 Model 3s per week, but can it continue?

Tesla makes 5000 Model 3s per week, but can it continue?

Now, after producing 5,031 Model 3s in the past seven days, the company is raising its production goals for its cheapest vehicle yet - considered key to its future - to 6,000 a week.

By building more than 5,000 of the sedans in the last week of the second quarter, Tesla "just became a real auto company", the chief executive officer said in an internal email Sunday obtained by Bloomberg News.

"We did it!" CEO Elon Musk announced in an email to Tesla employees Sunday afternoon, which Bloomberg published in its entirety.

If we are to solve the great challenges of the twenty-first century - whether overpopulation, democratic disruption, new antibiotic-resistant diseases, or shortages of resources - it will be thanks to innovators like Musk, who think not just outside the box, but in an entirely different box-free universe.

After months of "production hell", Tesla has finally reached its important Model 3 production target of 5,000 units per week. Once the cars were being produced in volume, Tesla briefly enjoyed profits-until Tesla began production on the next model and the cycle of losses started over again.

As of Friday's close, 34.83 million Tesla shares or 27.5 percent of the shares available for trading were sold short and investors did not appear to be covering their positions ahead of Monday's announcement, according Ihor Dusaniwsky, managing director at S3 Partners a financial analytics firm.

Money-losing Tesla has been burning through cash to produce the Model 3, and delays have also potentially compromised Tesla's first-to-market position for a mid-priced, long-range battery electric auto as a host of competitors prepare to launch rival vehicles.

Musk bragged that not only did they hit their target of 5000 Model 3s, but their total vehicle production for the week was 7000. Statements from officials say that, despite being built in a tent, the Model 3s that roll off that line are "as good as" those coming off GA3. It was not clear if Tesla could maintain that level of production for a longer period. In a note obtained by Marketwatch, Levy explains that the production rate isn't "operationally or financially sustainable".

Model 3 production tripled to 28,578 in the company's second quarter from the previous quarter, Tesla said.

Pricing starts at $35,000 for the vehicle, and about 450,000 have been pre-ordered by consumers.

If Tesla managed to put off the 200,000th delivery until after June, tens of thousands more customers will have a chance to take advantage of the full credit. Wall Street analysts polled by Bloomberg have an average price target of $314 for the stock, which is now trading near $359 a share.

Musk said that it would require "three to six months after [producing] 5,000 vehicles per week to ship the $35,000 Tesla" because "shipping the minimum cost Model 3 right away would cause Tesla to lose money and die".

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