Tesla's Model 3 Rollout Moves at Geologic Speeds

Tesla has now pushed back the ramp up of production on the Model 3 sedan yet again, saying it won’t be able to deliver 5,000 of them per week until June of this year. This must be frustrating to not only the customers waiting on their cars, but to the company itself. Quality issues have been a problem, and it seems delays are meant to address those issues, but it may end up tarnishing their reputation.

In March of 2016, Elon Musk unveiled the Tesla Model 3 to which customers put down $1,000 deposits to be placed on a waitlist. People lined up at showrooms, full of anticipation for a car that hadn’t even been built yet. With the incredible demand for the mass-market sedan, Musk told shareholders in a letter that he was advancing Tesla’s production plans by two years. The plan was to build a total of half a million cars annually by the end of 2018, but fast-forward to today and that plan has gone pretty sideways.

Tesla had no experience manufacturing cars in high quantity, and to reach the goal they set for themselves might have been overly ambitious. In an earnings call of May 2016, Musk said “We are hell-bent on becoming the best manufacturer on Earth,” saying he expected to make “100,000 to 200,000” Model 3 sedans by the end of 2017. This didn’t happen, as Tesla only produced 101,000 cars in total in 2017, of which only 1,770 Model 3 sedans were delivered to buyers in the second half of that year.

Tesla had planned on delivering 5,000 Model 3s per week by the end of 2017, but had to push that date back. In November, the company said they were going to hit that 5,000 units per week target by March 2018, blaming “production bottlenecks” at Nevada battery plant known as Gigafactory 1. As Model 3 sedans are coming off the production line so slowly, it’s quite unlikely that the company will the goal of 500,000 units produced this year.

Investors are concerned that Tesla will have to raise more money and that some consumers will have to wait longer than two years for their car. This worry comes as Tesla delays this time to the end of June 2018, urging for a “focus on quality and efficiency rather than pushing for the highest possible volume in the shortest period of time.” That’s actually a good thing, as slowed production in the relatively short term is a lesser evil than a massive recall somewhere down the line.

Despite all the hiccups the company has faced in recent months surrounding the production of the Model 3, Tesla does seem to be making some progress. It has increased its deliveries of the sedan in the last few weeks, leading us to believe the “production hell” they were in is over. If they’re truly able to get production to where it needs to be, coupled with meeting the quality standards we’ve grown to expect from them, their good reputation and loyal customer-base should remain intact. Let’s just hope they don’t bite off more than they can chew in the future.