Tesla is producing the Model 3 at speed. The company’s $35,000 entry-level electric vehicle, which entered production last July, is a key part of its expansion as it works to fulfill the 400,000 or so $1,000 reservations on the books. On Tuesday, a leaked e-mail revealed that Tesla is managing to sustain its 2,000-per-week production rates from the previous quarter and it’s set to triple that in just two months’ time.
The internal e-mail from CEO Elon Musk shared with Electrek says that “congratulations are in order” as the company produced 2,000 Model 3s per week for three weeks running, with rates of 2,020 in the first, 2,070 in the second and 2,250 in the third. This was in addition to 2,000 Model S and X vehicles. The company plans to stop production for three to five days at both Fremont and Gigafactory plants to make upgrades that will enable a rate of up to 4,000 per week in May, followed by a second set of upgrades to reach 6,000 per week by the end of June.
The e-mail is a strong rebuttal to analyses by firms like Goldman Sachs, which stated that a sustained rate of 1,400 per week looked more likely and Tesla would need to raise capital to continue operations. A slow production start saw an average of just 202 Model 3s produced per week in the fourth quarter of 2017, far lower than the company’s goals of 20,000 per month by December. Tesla blamed the slow start on a subcontractor that “really dropped the ball.”
In the rest of the e-mail, Musk outlined goals to become “far more rigorous about expenditures” and to cut “Russian nesting doll[s]” of contracted middle management. Musk also detailed the company’s incredibly high standards for quality assurances, stating that “our car needs to be designed and built with such accuracy and precision that, if an owner measures dimensions, panel gaps and flushness, and their measurements don’t match the Model 3 specs, it just means that their measuring tape is wrong.”
All eyes will be on Tesla’s next earnings report, which NASDAQ estimates will take place on May 2. Consensus recommendation for the stock gives it a soft “buy” rating, but further delays in the Model 3 could shift the mood.
If Tesla can ramp up production, it will gain the expertise to help with future projects like the Model Y sports utility vehicle.