Tesla "just became a real vehicle company" after reaching a critical milestone

Gladys Abbott
July 2, 2018

Musk also said Tesla had produced 2,000 Model S sedans and Model X sport-utility vehicles in addition to the Model 3s, bringing total production to 7,000 vehicles a week.

Having missed earlier production ramp up deadlines, Musk gave CBS a tour of the factory back in April, and promised to be hitting 5,000 Model 3s a week by Q3 of this year.

Damodaran said: "Put bluntly, there is no chance that Tesla can deliver what it needs to, in terms of scaling up revenues and improving profitability, to justify its market capitalisation, without raising new equity along the way". Since then Elon Musk, the automaker's CEO, has gone to extremes to fulfill his promise of making 5,000 cars a week by the end of June. While that figure has been achieved (minus a few hours), it remains to be seen if Tesla can keep up this pace due to battery issues and an over-reliance on automation that has plagued Model 3 production since July 2017. Tesla also expects to produce 6,000 Model 3 sedans a week "next month".

Brian Johnson, an analyst with Barclays, warned investors in March to be wary of brief "burst rates" of Model 3 production that were not sustainable.

"I think we just became a real vehicle company", Mr Musk wrote. Tesla shut down the manufacturing line and set up a pop-up tent assembly line to make it happen.

In May, Tesla sent a new battery assembly line via cargo planes to its Gigafactory battery plant outside Reno, Nevada in order to speed production, as first reported by Reuters.

Despite originally touting the Model 3 as a $35,000 vehicle, Tesla has yet to begin building that basic version and instead is now building a higher-priced version.

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Musk said the company hit its target of 5,000 Model 3s in a week, according to an email sent to employees on Sunday afternoon and seen by Reuters. The milestone, which has eluded Tesla since the vehicle started production past year, was teased over the last few weeks of June.

The 5,000th Model 3 apparently rolled off the line around 5 a.m.

The standard battery version of the auto that starts at $35,000 still isn't available in the design studio, so anxious customers can either order a higher-priced Model 3, continue to wait, or cancel their order.

It's not clear how numerous 450,000 who put down a $1,000 refundable deposit did so on the basis of the $35,000 asking price.

Tesla said in May that its net Model 3 reservations - accounting for new orders and cancellations - exceeded 450,000 at the end of the first quarter.

Steady progress has enthused others, however, and Tesla's market value is close to that of General Motors Co. "Though the production hiccups have led to tumultuous periods for the shares, they're now up 10% this year, and the company is valued at $58.2 billion".

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