Palo Alto, California, November 2, 2017
Tesla has moved the deadline for the production of its Model 3 cars to 2018 after revealing its Q2 net income that registered as a loss of $ 619 million. The company has blamed the slow production of its battery module at Gigafactory as the main reason for the delay. It has also promised to manufacture 20,000 cars per month, which translates to 5,000 cars per week in Q1 of 2018, instead of its original schedule which was December 2017.
Elon Musk, CEO, Tesla has already admitted to what he defined as “production hell” and bottlenecks, as a reason for why many of Tesla’s customers weren’t getting their electric cars on time. The company revealed its production problems in Gigafactory, Nevada in October itself, announcing that it had produced only 260 Model 3s as opposed to the 1,500 units that the company predicted it would manufacture, only a month before. There were some speculations in the Wall Street Journal that the production process was still relying on hand-made parts although the company denied it. Other reports suggested that it had run into trouble while welding metal sections of the car.
In a report from CNBC , Musk stated that the production was held back at Gigafactory due to a systems integration contractor who “dropped the ball”.
“The primary production constraint by far is in battery module assembly,” said Musk, who said he has been working out of the Gigafactory in order to be closest to the largest problems in Tesla’s production line.
There are four “zones” in battery module production for the Model 3, and there was a particularly severe problem in one of them, Musk said.
The loss experienced by Tesla in this quarter is recorded as its largest ever, following its Q1 loss of $336 million. Amidst doing poorly in the finance department, Tesla continues to incur problems among its Fremont workers and Solar City subsidiary after a series of layoffs that amounted to several hundreds.
Tesla’s losses this year, despite a good run in 2017, have been attributed the aggressive ramping up of Model 3’s production scale. The Model 3 car is priced at $35,000 which is only half of what the Model S was priced at. This move can be seen as a bid to attract the mass market.
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