Tesla finally hits Model 3 target, focus on sustainability

By BLOOMBERG

SAN FRANCISCO • Tesla Inc reached a milestone critical to Elon Musk’s goal to bring electric cars to the masses — and earn some profit in the process — by finally exceeding a long sought production target with the Model 3.

By building more than 5,000 of the sedans in the last week of the second quarter (2Q), Tesla “just became a real car company”, the CEO said in an internal email on Sunday obtained by Bloomberg News.

He may turn out to be right, if Tesla can hit these manufacturing goals again and again. After all, producing 5,000 units of one vehicle in a week is far from unheard of in the auto industry, and the company had to pull out all the stops to get to this point, including constructing a tent and makeshift assembly line next to its factory.

What Musk still needs to prove is that this level of output can endure.

“Now that Tesla has achieved the 5,000 mark, it needs to do so on a steady, rout ine basis and with excellent quality,” said Michelle Krebs, an analyst with car-shopping website Autotrader.

Tesla rose 4.6% in pre-market trading, pushing gains this year to more than 10%.

Hitting the 5,000-a-week target is a major achievement for Musk, who first revealed the Model 3 in late 2016. It’s also a relief for customers who have waited for their cars for more than two years. Their patience has been tested by a series of setbacks that forced Tesla to push back the goal from an earlier plan to reach this level of production by the end of 2017.

The 47-year-old Musk said he celebrated his birthday earlier this week at the factory, where he had been posting photographs of drive units and the paint shop to his social media accounts.

“We did it!!” Musk proclaimed in the email to employees on Sunday. “We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible.

Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked.”

Optimism about the Model 3 transforming Tesla into a much bigger carmaker that sells to the mass auto market sent the company’s market capitalisation past Ford Motor Co and General Motors Co (GM) for the first time last year. While production hiccups have led to tumultuous periods for the shares, the company is valued at US$58.2 billion (RM232.8 billion).

Musk wrote that, not only did Tesla “factory gate” more than 5,000 Model 3s, it may make 6,000 Model 3s a week next month. Including Model S and X production, the company had a “7000 vehicle week”, he wrote.

The key will be whether Tesla can keep this pace, said Dave Sullivan, manager of product analysis for Auto- Pacific Inc. “Reaching it is one thing,” he wrote in an email. “

Consistently producing 5,000 per week with outstanding quality is another.” Not impressed was Steven Armstrong, Ford Motor’s CEO for Europe, the Middle East and Africa. “7000 cars, circa four hours (heart) Ford Team (heart)” Armstrong wrote on his verified Twitter account, parodying a similar tweet from Musk about Tesla’s weekly output.

The assembly plant reached the target by early Sunday, according to workers who asked not to be identified, with one saying cheers were heard at the end of the line around 5am local time. A photograph of employees signing a banner welcoming them to the “Model 3 5K Club” was deleted from Twitter and remains on Reddit.

Tesla is expected to release a formal statement on 2Q vehicle production and delivery figures as soon as yesterday.

In early June, Musk told shareholders at Tesla’s AGM that he was feeling optimistic about Model 3 production thanks to a third general assembly line. It turns out that third line was being built outside — and under the massive tent.