Tesla misses Model 3 production goal — again

A Tesla Model 3 is seen in a showroom in Los Angeles on Jan. 12. (Lucy Nicholson/Reuters)

When it comes to Tesla, it appears that even modest progress is enough to quiet critics and rally investors.

After what might have been the worst week in the automaker’s history, the company announced Tuesday that it had fallen far short of its first-quarter production goals for its mass-market Model 3 sedan.

Tesla has produced nearly 10,000 of the mass-market sedans since the beginning of the year, “a fourfold increase over last quarter,” the company said.

[ Tesla’s ‘transformative year’ is hitting a brick wall ]

Chief executive Elon Musk had offered assurances that Tesla would be rolling out 2,500 Model 3s a week by the end of March.

Last summer, Musk said Model 3 production would remain slow early on before climbing rapidly to 20,000 vehicles a month by the end of 2017 and 50,000 a month by the end of 2018.

About 400,000 people have put down $1,000 to get their names on a waiting list for a Model 3.

Model 3 production — which Musk has called “the final step in the master plan” — is supposed to coincide with construction of the $11 billion Gigafactory outside Reno, Nev. That’s where Tesla will manufacture the lithium battery cells that will be bundled inside a new generation of vehicles.

If Tesla starts producing thousands of vehicles a week on a consistent basis, company officials hope they can ride the electric vehicle into the mainstream.

The vehicle’s debut has been stalled by production bottlenecks that have persisted for months, leading many critics to issue existential warnings about the company.

In recent days, Tesla has been besieged by a wave of negative attention. The National Transportation Safety Board and the California Highway Patrol are investigating Tesla after the death of an Apple engineer whose SUV was operating in Autopilot mode when it crashed into a median on Highway 101 in Mountain View, Calif., last month.

Last week — as the company announced a recall affecting 123,000 cars worldwide — reports that Tesla was expected to again miss its production goals began to circulate online.

On Tuesday, however, Tesla framed the production issues as a sign of progress.

“We were able to double the weekly Model 3 production rate during the quarter by rapidly addressing production and supply chain bottlenecks, including several short factory shutdowns to upgrade equipment,” the company said.

“In the past seven days, Tesla produced 2,020 Model 3 vehicles,” the company added. “In the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles.”

Tesla has produced nearly 34,500 vehicles in the first quarter of 2018, a 40 percent increase from the fourth quarter of 2017, the company said. The vast majority — almost 25,000 — of those vehicles were the Model S and Model X.

Tesla said Model 3 production will “climb rapidly” over the next three months, reaching 5,000 units a week by the end of the second quarter.

[ Tesla asserts Autopilot ‘unequivocally makes the world safer’ — days after fiery, fatal crash ]

The effort, despite progress, is not without more headaches, which Musk alluded to on Twitter this week. Responding to a news report that he had been personally forced to take over Model 3 production from the company’s senior vice president of engineering, Musk fired back on Twitter.

Can’t believe you’re even writing about this. My job as CEO is to focus on what’s most critical, which is currently Model 3 production. Doug, who I regard as one of the world’s most talented engineering execs, is focused on vehicle engineering.
— Elon Musk (@elonmusk) April 2, 2018

As a thread quickly unfolded, and with Tesla critics and supporters responding, Musk chimed in again, offering a small window into his production “hell.”

“About a year ago, I asked Doug to manage both engineering & production. He agreed that Tesla needed eng & prod better aligned, so we don’t design cars that are crazy hard to build. Right now, tho, better to divide & conquer, so I’m back to sleeping at factory. Car biz is hell …”

Tesla’s stock closed up nearly 6 percent Tuesday to $267.53.

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