Tesla Could Miss Model 3 Delivery Targets. Here’s Why It’s Not Shocking
By CCN Markets: After Elon Musk announced that he was cracking the whip on Tesla employees to hit unrealistic quarterly delivery targets, a document leak suggests that target will not be met, according to Business Insider. This comes as a surprise to nobody.
Overpromising and Under-Delivering, as Usual
Business Insider reports that, according to documents it has viewed, things are looking bad:
“According to documents that describe the daily output rate for one segment of Model 3 production in Fremont, California, output reached at least 1,000 units per day just once in the weeks following Musk’s May 22 email. During that period, the average output for that segment was about 700 units per day.”
Tesla Is Inconsistent
As Business Insider is quick to point out, this is but one segment of many in the manufacturing process. Other segments may operate much faster. However, it does serve as a guide, and that guide spells trouble for Tesla.
Tesla’s manufacturing is inconsistent. Established car manufacturers can throttle the process up or down and deliver consistently. Tesla’s Model 3 production appears random.
At the end of Q2 2018, Tesla produced 5,000 Model 3 vehicles in one week. Yet the rest of the quarter showed an average of just 2,200.
In Q3 2018, Tesla produced an average of 4,100 cars every week but ramped to 5,300 in the final week.
Analysts Are Skeptical
Cowen & Co. analysts point out that production is lagging because demand is lagging:
“Musk claims that sales have far exceeded production, but the data doesn’t suggest [it]. Basic microeconomic theory would suggest that goods or services that don’t have a demand problem don’t see their prices lowered by half a dozen times in [four-to-five] months.”
Demand issues are tied to pricing problems. Elon Musk promised affordable electric vehicles, around the $35,000 price point, yet that has never materialized. Tesla has had to cut prices on vehicles multiple times.
Does anyone want to bet on the final delivery count? Right now, it’s not going to be 90,000. And how many of them will spontaneously combust?
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN Markets.
This post was last modified (EST) on 18/06/2019 18:46