• 8 minutes U.S. Shale Oil Debt: Deep the Denial
  • 13 minutes WTI @ $75.75, headed for $64 - 67
  • 16 minutes Trump vs. MbS
  • 5 hours Knoema: Crude Oil Price Forecast: 2018, 2019 and Long Term to 2030
  • 13 hours Nuclear Pact/Cold War: Moscow Wants U.S. To Explain Planned Exit From Arms Treaty
  • 13 hours Why I Think Natural Gas is the Logical Future of Energy
  • 54 mins Merkel Aims To Ward Off Diesel Car Ban In Germany
  • 12 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 6 hours Get on Those Bicycles to Save the World
  • 9 hours Iraq war and Possible Lies
  • 1 day Satellite Moons to Replace Streetlamps?!
  • 1 day Can “Renewables” Dent the World’s need for Electricity?
  • 1 day Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 20 hours Long-Awaited Slowdown in China Exports Still Isn’t Happening
  • 7 hours EU to Splash Billions on Battery Factories
  • 23 hours Can the World Survive without Saudi Oil?

Tesla Still Struggling With Production, But Skies Are Beginning To Clear

Tesla

After releasing its worst quarterly figures ever, Tesla said it will delay the full-scale production of its Model 3 to early 2018, from December this year. Now, the company plans to churn out 5,000 Model 3s weekly starting some time in March next year, after announcing a total production of just 260 cars of the affordable model in the third quarter and deliveries of 220. Plans were to produce 1,500 Model S between July and September.

The biggest problem seems to be the new battery that Tesla is developing. This battery should make the Model 3 cost-effective, but progress on it was hampered by problems with subcontractors, the major degree of automation in the gigafactory where the Model 3 is manufactured, and other issues in the third quarter of the year, leading to delays.

Now, however, the skies ahead look brighter, according to Elon Musk, although the Tesla CEO declined to give an estimate of when Model 3 production will reach 10,000 per week – given the uncertainty surrounding what other challenges may crop up along the way.

Meanwhile, Tesla delivered a record number of its other two models during the third quarter, at 25,915 combined, with annual deliveries of the two models seen to hit 100,000, up 30 percent from 2016. In the fourth quarter, however, Tesla will cut production of Model X and Model S, as it continues to direct more resources to Model 3.

Related: Trump’s China Trip To Reap Billions In Energy Deals

It’s Model 3 that analysts see as the main stumbling block in front of the electric car maker. According to UBS, there are more challenges with it to overcome, and Tesla will continue to burn cash in its attempts to do that. Model 3 is also seen as the culprit behind the larger than expected quarterly loss Tesla reported yesterday, at US$619 million, although revenues were up by an annual 30 percent to US$3 billion.

Yet it’s easy to see the reason for the focus on Model 3: this is the first affordable Tesla, at US$35,000 and it is widely seen as the ultimate guarantee of the company’s future profitability. Given that Tesla is doing some things for the first time in the auto industry, including the degree of automation in the manufacturing process, stumbling blocks are only to be expected.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • kafantaris on November 02 2017 said:
    Skies are beginning to clear? Quite the opposite. Rather, it looks like the underlying problem with the Model 3 is more fundamental than even the doomsayers thought. Maybe we should have suspected something was wrong when Tesla’s longtime battery scientist and battery technology director, Kurt Kelty, suddenly left the company in July. Back then, Tesla did not hint at the depth of its pain, saying only that Kelty’s responsibilities will be “distributed among Tesla’s existing teams.” But there could have been no such teams to pick up the slack if Kelty had left because he hit an impasse with the battery technology -- the same impasse that Elon Musk is forced to deal with now.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News