The production feat of Tesla Model 3 is not up to the defeat of doubts

Tesla Inc. orchestrated an explosion of its production at the end of the quarter with model 3, the pivotal model of Elon Musk's quest to put electric cars in the aisles of ordinary consumers. To refute his skeptics, he will have to make these levels of production routine.

The result reached 5 031 Model 3 in the last week of the second quarter, exceeding a goal that the CEO of Tesla had indicated to be crucial for generating money and profits. About 20% of these cars came out of a makeshift line that the company built last month under a tent outside its assembly plant in California.

Signed, Sealed, Delivered

Tesla Delivered 18,440 Model 3 Sedans in the Second Quarter of 2018

Source: Company Records

Musk emailed on Sunday to greet staff for having achieved the goal of producing 5,000 Model 3 in the last week of June. The progress he has made is essential for the automaker to be able to support itself while continuing the 47-year mission to move the world to battery transportation.

"They are dramatically increasing production now" Joe Fath, a fund manager for T. Rowe Price, Tesla's second largest shareholder behind Musk. "They have a lot of vehicles in transit to the sales centers, which puts them in for a very good third quarter."

Read more: Bloomberg model 3 reflects surge

Tesla hasn & # 39; t earned an annual profit in his 15 years of history. He regularly had to return to Wall Street to seek billions of dollars after burned cash at rates that alarmed some investors and credit rating companies.

Fath, based in Baltimore, said Musk had no trouble raising capital before and will not do it if he chooses to do it now.

Supporting Production

Proving that these production rates can be sustained will be the key to justifying a 19659020] General Motors Co. market capitalization and making Tesla the most valuable American automaker. The skepticism that persists among some investors and analysts has contributed to the stock falling 3.2% at 12:25. in New York, the recovery of a gain of 6.4% reached shortly after the start of regular negotiations.

"We do not consider this rate of production as operationally or financially viable," said Efraim Levy, an analyst at CFRA Research, The View of a "Pink Future" for Tesla Could Have Been in the stock before the company reported quarterly results, according to Joe Spak, an analyst at RBC Capital Markets, which evaluates Tesla has reaffirmed its guidance for a positive net income and a positive cash flow in the third and fourth quarters, although a weaker dollar and tariffs on vehicles and parts were traded between The United States and China could lead to results. He also foresaw that he would be able to build 6,000 Model 3s a week by the end of August.

"The last 12 months have been some of the most difficult in Tesla's history," said the company in a statement issued in 1965. Reaching the Model 3 target of 5,000 a week "n & # 39; was not easy, but it was well worth it. "

Standards ignored

Tesla avoided the standards of the automotive industry with Model 3, including skipping the stage Production prototypes of the car to develop kinks before shipping the vehicles to consumers. The company has also invested heavily in robots to speed up the manufacture of sedans and batteries, which is a mistake on the part of Musk "This company ignored what had happened to it and thought it could do things differently or more effectively, Kevin Tynan, a Bloomberg Intelligence analyst, said Monday on Bloomberg Television.Musk found that intensive use of automation "was not the best way to assemble the vehicles, and they had to backtrack. "

Model 3 customers proved to be a patient for all of Tesla's manufacturing challenges.The company said the number of reservations for the sedan is 39, about 420,000 and that orders could surpass the growth of production once again the cars will arrive in stores for road tests

This is a critical threshold : Once a car manufacturer reaches this number of electric vehicles, the $ 7,500 federal tax credit begins to decline and disappear gradually over the following quarters.

Tesla delivered 18,440 models 3 in the second quarter and reported that 11,166 others were in transit to customers. The large number of vehicles in transit may mean that the company has not reached the 200,000 mark in June, which would allow tens of thousands of customers who take delivery this quarter to benefit from the tax credit. integral.

His model 3 in the second quarter was Major Earl Banning, 42, an Air Force neuropsychologist living in Dayton, Ohio. He took delivery on May 29 and drove about 2,300 miles in June.

"The car has destroyed my expectations," Banning said. "It makes other cars obsolete."

– With the help of Sophie Caronello and Sarah Gardner