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For 2018, the CEO of Tesla Inc. (TSLA), Elon Musk, was quite consistent in the company's goals: Produce 2,500 units 3 a week at the end of the first quarter and 5,000 units a week at the end of the second quarter.
At the end of the first quarter, Tesla was taking out just over 2,000 units of Model 3 a week and told investors that this trend had always been the same in April. Which means that the company has not just increased the results of last week to try to answer the numbers. He made steady and steady progress.
Given that Tesla has arrived at about 20% of its first quarter goal, many people are wondering if the company can reach its goal of 5,000 model units 3 a week by the end of the second quarter. Fortunately for those who love the drama of Tesla, we will know soon: The quarter ends this weekend.
Note that on May 2, Tesla released its quarterly shareholder letter that said, "We continue to target model 3 production of about 5,000 a week in about two months. There is therefore a margin of maneuver with the exact amount and the exact period.
Yet Musk has remained steadfast in his more recent predictions. For example, he has repeatedly told Wall Street that the company would not need to raise capital for the rest of the year. Given the restructuring and layoff of almost 9% of its workforce, management seems to want to keep its word.
The CEO also repeatedly stated that Tesla would be positive in terms of cash flow and that GAAP would be profitable in the third and fourth quarters. With the second half of 2018 fast approaching, investors will closely monitor upcoming earnings reports to see if the company can deliver.
Last but not least is the production number, which Musk also supported. Earlier this month, he told investors at Tesla's annual shareholders meeting that it is "very likely" that they are reaching their target. At that time, Tesla showed that she could reach about 500 units of Model 3 a day, or about 3,500 a week.
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The company gives a new meaning to "tent cities" on the West Coast, as images of its improvised assembly lines covered with giant tents circulate online. While short sellers and critics find this evolution hilarious, many reports suggest that this is going pretty well.
As for the summer, it will be the number 1 on the list of Tesla investors. Because Tesla released its first quarter results in early May, the automaker will likely announce its second quarter results in early August. From here, the production number will be the biggest factor of feeling. If Tesla misses her goal, it's a question of how much. Does it produce 4,999 Model 3s a week? 4,000?
We will not know until Musk tells us. And although many do not like his sordid approach – calling for a stormy weather in Shortville, for example – it's hard to say that it's not all. While he runs other businesses, like The Boring Company and SpaceX, there have been nights when he sleeps on the floor at Tesla's facility.
At the annual meeting, Musk explained some of the manufacturing problems of the company. Tesla tried to over-automate and specifically, tried to automate tasks that were simple for humans are difficult for machines. Instead, the company should have left this job to human editors – who are underestimated, in his opinion – and worked to perfect the automation process for difficult tasks for humans.
The improved assembly process directly reflects the number of cars produced by Tesla in early July.
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It can also be a big driver for the stock. A big failure will probably give the bear some momentum, especially as the stock rests at an important technical crossroads. Conversely, even if, exceeding, meeting or even close to its goal, Tesla could boost the confidence of the bulls, allowing them to push the stock even higher.
The production rate counts because of what Tesla builds. The automaker is not building the Model 3 base vehicle for $ 35,000 at this time. Instead, they focus on performance packages, AWD offerings and long-range versions of Model 3.
All of these products come with a much higher price tag and, as such, should help drive down sales, gross margins and cash flow. Although this increase only lasts a few quarters until basic model 3 begins production (planned for early 2019), it could give buyers the green light to increase their market share as worries grow. Tesla's financial institutions are loosening up.
In short? This production number counts and fortunately we will know what will happen soon.
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