Tesla Results and Model 3 Production Update

Tesla, the American automobile company known for it’s sleek, all-electric vehicle product line, is in the news again. This week,  the Company announced its Q1 results, which were received largely as a mixed bag:  Tesla’s first quarter adjusted net loss widened to $3.35/share as revenue grew 26% to a record $3.4 billion, slightly better than consensus.  However, 2nd half profitability is possible if the company can achieve productions targets of new models, particularly the “Model 3” sedan.

Therefore, investors are primarily focused on Tesla’s ability to ramp up Model 3 production.  Tesla’s CEO, Elon Musk, has stated that they are targeting production of 3,000 vehicles per week soon, and 5,000 vehicles per week two months from now. The 5,000 unit target has been in place since February.  Production of the Model 3 was halted earlier this year at the Fremont, CA factory, in an attempt to re-tool and prepare the factory for the higher production levels.  As many in the industry have noted, this is no simple task.  Robotics play a key role in optimizing production levels, but so do human workers.  Tesla seems to be searching for the right balance between the two, having stated earlier that they had placed too much emphasis on automation.  They’ve not been shy in touting that the company would soon implement restructuring to cut costs and simplify its processes.

We’re cheering the success of this iconic American automobile company.  However, we know all too well the consequences of ramping up production without thorough QA process :  defects !  Hopefully, Tesla will be able to reach its production targets while avoiding a surge in product safety defects or other quality problems.

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