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Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

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Tesla Model 3 Faces Manufacturing Crisis

The manufacturing of Model 3 sedans has slowed significantly in recent weeks, according to a report by Clean Technica.

CEO Elon Musk had promised to produce 2,500 Model 3 vehicles a week by the end of March, which is just eight days from today.

Fans of the brand argue that the Fremont, California, manufacturing facility should be able to pump out an adequate number of vehicles, but estimated figures do not reflect the ideal case.

Bloomberg’s best guess is that Tesla is building 810 vehicles a week, with 10,524 Model 3s built in total.

Tesla does not seem to be able to capitalize on demand in accordance with its pre-invested reservation system. A $1,000 reservation system creates a position on the waiting list that could be fulfilled sometime in the next year or so.

Investors tracking Tesla for an attractive opportunity will be left waiting for a while, according to the latest figures.

“We believe the company is tracking below its 2018 Model S/X guidance of approx. 100k units (an implied 25,000 per quarter). Further, while monthly Model 3 deliveries are showing sequential improvement, we estimate that they will fall well short of consensus expectations,” Goldman Sachs’ David Tamberrino wrote in a note to clients.

Related: North Sea Oil Has Escaped Its Death Spiral

According to Bank of America analyst John Murphy, Tesla still has time to get its business on track, but its margin for error is getting thinner by the day. The greenest customers are still expecting tip top service, after all.

“Despite being a growing top-line business in need of capital to fund its ambitious growth plans, we think investors may grow tired of supplying Tesla with incremental low-cost capital in perpetuity if investments fail to generate returns soon,” Murphy said.

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By Zainab Calcuttawala for Oilprice.com

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