Tesla's Model 3 production goals hinge on system that is still in Germany

12 February 2018 - Autoblog

Tesla's Model 3 production goals hinge on system that is still in Germany

Money-losing Tesla is sticking to its guns on first-quarter Model 3 production rates, but the tools it's depending on to meet its own oft-delayed production target are still in Germany.

Tesla this week posted its worst-ever quarterly loss of $675.4 million, which was actually smaller than Wall Street expected. But it stuck by its previous target — which had been pushed back twice already — to build 2,500 Model 3s per week by the end of March and then 5,000 per week by the end of June.

To get there, it'll need a new automated system for producing modules designed by its Tesla Grohmann Automation unit in Germany. The production line is already working there, Bloomberg reports, but it still needs to be shipped to the U.S. next month before it can be put to use and help alleviate parts-handling issues at its Model 3 assembly plant in Fremont, Calif.

"That's got to be disassembled, brought over to the Gigafactory and reassembled and then brought into operation at the Gigafactory," Tesla CEO Elon Musk was quoted as saying during a call with analysts and media Wednesday. "It's not a question of whether it works or not. It's just a question of disassembly, transport and reassembly."

The timing adds pressure to Tesla's first-quarter production goals, and it adds yet another item to the company's lengthy to-do list. Wall Street and automotive analysts are closely following the problem-plagued production ramp of the Model 3, the electric sedan that represents Tesla's ambition to transform itself into a mass-market automaker and start turning a profit.

Tesla managed to please many analysts by slowing its cash burn in the fourth quarter, but it says it plans to increase capital spending this year above the $3.4 billion it spent in 2017, partly on increasing Model 3 production. It's also got to back up promises on future products: The Tesla Semi is promised for 2019, plus the all-new Roadster, coming in 2020. And don't forget the Model Y, its compact crossover, or that battery-powered pickup truck Musk says he's been dreaming of for years.

It all adds up to a short honeymoon for Elon Musk's ambitious publicity stunt earlier this week of launching his old Roadster into space with a dummy named Starman. "If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production," Musk said on the earnings conference call.

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