Of the many things that Tesla CEO Elon Musk has uttered or tweeted in the past few months, none may have been more important than what he said, and meant, on Aug. 1 — Tesla would build 50,000 to 55,000 Model 3 sedans in the third quarter.
Musk has made and missed more production predictions than any modern day CEO. However, this time, the company made his – and analysts – forecasts by producing 55,849 Model 3s in Q3. Analysts predicted 55,600.
Overall, Tesla built an impressive 83,500 vehicles during the period, exceeding analysts predictions of 80,000 vehicles, and more than three times the previous year’s tally of 26,150 units. During Q3, Model S sedan sales rose to 14,470 from 14,065 a year earlier, while Model X sport-utility vehicle deliveries rose to 13,190 from 11,865.
During the third quarter, Tesla averaged 4,000 Model 3s each week, although in the last week, Tesla said it made more than 5,300 Model 3s.
(Musk settles: Pays SEC $20 million, resigns as chairman. Click Here for the story.)
While the numbers indicate an improved build rate, the company fell short of its own goal of 6,000 units weekly by the end of August. Long ago, Musk had predicted the company would build 10,000 of the sedans each week.
Getting high-volume production solved is crucial to the company’s long-term success. It needs to offer more than one mainstream-style/priced vehicle – the Model 3 starts at $35K, but is likely to have an average price in the mid-$40K range.
The company has a whole list of vehicles it wants to produce, starting next with a small SUV/CUV-type vehicle and a pickup truck. The second-generation roadster is expected to arrive sometime in 2020 as well.
(Click Here for more about Tesla taking heat as Musk lashes out.)
Meeting the production targets is a welcome respite from the flood of bad news that has hit the company in recent weeks, including the most recent offering of Musk resigning as chairman in the next 40 days or so and paying a $20 million fine to the Securities and Exchange Commission to settle a lawsuit.
The SEC contends that Musk committed fraud when he tweeted back in July that he wanted to take the company private at $420 a share and – here’s the sticky part – he had the funding in place to make the plan a reality. Ultimately, an investigation revealed he’d broached the Saudi royal family’s investment fund about the idea, but the discussions led nowhere.
Even the news of meeting the production numbers was offset by the company’s current problem: delivering the completed vehicles. There is a shortage of car carriers and Tesla is actually building carriers to ferry vehicles to stores to deliver to customers.
(To see more about Musk facing a Justice Department probe, Click Here.)
In other cases, Tesla employees are personally delivering vehicles to buyers’ homes to ensure they’re getting vehicles in a timely manner. Despite the good news, Tesla stock is down 2.63% to $302.53 in late day trading.