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| Tesla Reports Uptick in Model 3 Output, but Falls Short of Musk’s Goal | Tesla Reports Uptick in Model 3 Output, but Falls Short of Musk’s Goal |
| (about 3 hours later) | |
| Tesla said on Tuesday that it had produced almost 10,000 of its Model 3 electric cars in the first three months of 2018, a significant increase from the fourth quarter of last year but still short of the goal that investors hoped the company would reach. | Tesla said on Tuesday that it had produced almost 10,000 of its Model 3 electric cars in the first three months of 2018, a significant increase from the fourth quarter of last year but still short of the goal that investors hoped the company would reach. |
| The company said it had expanded output of the Model 3, its first mass-market offering, by “rapidly addressing production and supply chain bottlenecks, including several short factory shutdowns to upgrade equipment.” | The company said it had expanded output of the Model 3, its first mass-market offering, by “rapidly addressing production and supply chain bottlenecks, including several short factory shutdowns to upgrade equipment.” |
| Tesla is counting on a rapid increase in Model 3 sales to drive revenue and help pare down losses as it invests heavily in vehicles it hopes to offer in the future. | Tesla is counting on a rapid increase in Model 3 sales to drive revenue and help pare down losses as it invests heavily in vehicles it hopes to offer in the future. |
| The company had been aiming to produce at least 2,500 Model 3s per week by the end of the first quarter and took some extraordinary measures in its bid to do so. Tesla’s chief executive, Elon Musk, said he had been sleeping at its plant in Fremont, Calif. | The company had been aiming to produce at least 2,500 Model 3s per week by the end of the first quarter and took some extraordinary measures in its bid to do so. Tesla’s chief executive, Elon Musk, said he had been sleeping at its plant in Fremont, Calif. |
| In the past seven days, Tesla said, it produced 2,020 Model 3s, a rate it thought it would sustain in the coming week. “We expect that the Model 3 production rate will climb rapidly” through the second quarter, the company said in a filing with the Securities and Exchange Commission. | In the past seven days, Tesla said, it produced 2,020 Model 3s, a rate it thought it would sustain in the coming week. “We expect that the Model 3 production rate will climb rapidly” through the second quarter, the company said in a filing with the Securities and Exchange Commission. |
| But as it scrambles to ramp up production of one critical model, the automaker may be encountering a new danger — a drop in sales of its two other vehicles. Tesla said it delivered 21,800 Model S and Model X cars in the first quarter, down 23 percent from the fourth quarter. | But as it scrambles to ramp up production of one critical model, the automaker may be encountering a new danger — a drop in sales of its two other vehicles. Tesla said it delivered 21,800 Model S and Model X cars in the first quarter, down 23 percent from the fourth quarter. |
| Michelle Krebs, a senior analyst at Autotrader.com, said that the decline might suggest that the initial allure of Tesla’s vehicles was beginning to fade. “You just wonder if there’s enough growth in electric vehicles,” she said. “At first everybody who wanted a Tesla and could afford a Tesla hopped on. But it’s not the newest thing anymore.” | Michelle Krebs, a senior analyst at Autotrader.com, said that the decline might suggest that the initial allure of Tesla’s vehicles was beginning to fade. “You just wonder if there’s enough growth in electric vehicles,” she said. “At first everybody who wanted a Tesla and could afford a Tesla hopped on. But it’s not the newest thing anymore.” |
| Several weeks ago, Tesla said demand was strong for the Model S and Model X. In its S.E.C. filing, the company said first-quarter orders for the two vehicles were at a record and reiterated that “demand remains strong.” | |
| A sustained slump in Model S and Model X sales could complicate Tesla’s efforts trim the losses it has been reporting quarter after quarter. | A sustained slump in Model S and Model X sales could complicate Tesla’s efforts trim the losses it has been reporting quarter after quarter. |
| Even more important to the company’s stability is the increased production of the Model 3. Mr. Musk once envisioned producing as many as 500,000 cars this year, but production glitches and other delays have slowed Model 3 output to a crawl. In the fourth quarter, Tesla built just 2,425 Model 3s. | Even more important to the company’s stability is the increased production of the Model 3. Mr. Musk once envisioned producing as many as 500,000 cars this year, but production glitches and other delays have slowed Model 3 output to a crawl. In the fourth quarter, Tesla built just 2,425 Model 3s. |
| Tesla sought on Tuesday to allay concerns raised by some analysts that its production troubles could create a cash squeeze. It forecast that Model 3 output would reach 5,000 cars a week in “about three months” and that in the third quarter it would achieve “the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow.” | Tesla sought on Tuesday to allay concerns raised by some analysts that its production troubles could create a cash squeeze. It forecast that Model 3 output would reach 5,000 cars a week in “about three months” and that in the third quarter it would achieve “the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow.” |
| “As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines,” the company’s filing said. | “As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines,” the company’s filing said. |
| On Monday, Mr. Musk took exception to a report by The Information, a technology news website, that he had pushed aside the company’s senior vice president of engineering, Doug Field, and taken direct charge of Model 3 production. | On Monday, Mr. Musk took exception to a report by The Information, a technology news website, that he had pushed aside the company’s senior vice president of engineering, Doug Field, and taken direct charge of Model 3 production. |
| “Can’t believe you’re even writing about this,” Mr. Musk wrote on Twitter. “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.” | “Can’t believe you’re even writing about this,” Mr. Musk wrote on Twitter. “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.” |
| After others commented on his post, Mr. Musk elaborated, saying he and Mr. Field had taken a “divide and conquer” approach that had him sleeping at the factory. | After others commented on his post, Mr. Musk elaborated, saying he and Mr. Field had taken a “divide and conquer” approach that had him sleeping at the factory. |
| Including the Model S and the Model X, Tesla produced almost 35,000 vehicles in the first quarter, 40 percent more than the previous quarter. In the regulatory filing, the company called it “the most productive quarter in Tesla history.” | Including the Model S and the Model X, Tesla produced almost 35,000 vehicles in the first quarter, 40 percent more than the previous quarter. In the regulatory filing, the company called it “the most productive quarter in Tesla history.” |
| Tesla has been dogged in recent weeks by a barrage of negative news. Concern has grown over the safety of its Autopilot driver-assistance system after a fatal crash in California on March 23 that the company said occurred while Autopilot was engaged. It was at least the third fatal crash that has taken place while a driver was using Autopilot. | Tesla has been dogged in recent weeks by a barrage of negative news. Concern has grown over the safety of its Autopilot driver-assistance system after a fatal crash in California on March 23 that the company said occurred while Autopilot was engaged. It was at least the third fatal crash that has taken place while a driver was using Autopilot. |
| Tesla’s stock and bond prices have plunged amid concerns about how much cash the company is using as it struggles to speed up assembly and sales of the Model 3. With a starting price of $35,000, the car is e more affordable than Tesla’s other models and the company has been counting on a quick expansion of its Model 3 business to increase revenue. | Tesla’s stock and bond prices have plunged amid concerns about how much cash the company is using as it struggles to speed up assembly and sales of the Model 3. With a starting price of $35,000, the car is e more affordable than Tesla’s other models and the company has been counting on a quick expansion of its Model 3 business to increase revenue. |
| Tesla’s shares closed up 6 percent on Tuesday after the company’s filing, but they have still shed 23 percent of their value in barely three weeks. | Tesla’s shares closed up 6 percent on Tuesday after the company’s filing, but they have still shed 23 percent of their value in barely three weeks. |