Tesla Inc. is under enormous pressure to build its Model 3 electric car fast enough to meet customer demand—and to bring in revenue to offset billions of dollars spent preparing for its rollout. This week, we’ll find out how the company has fared, and how well an experimental Model 3 tracker we’ve built has been able to gauge its progress.
Back in February, Bloomberg set out to track how many cars Tesla is able to build—one of the biggest questions in auto manufacturing today. Tesla typically releases quarterly production numbers in the first few days of a new quarter. This quarter started on Saturday, so here are the Bloomberg tracker’s final estimates:
- Model 3 first-quarter production: 9,285
- Model 3 cumulative production: 11,971
- Peak weekly production rate: 2,200
- Standard weekly production rate: 1,190
Our model relies on Vehicle Identification Numbers (VINs) submitted by Tesla to U.S. safety regulators and those reported by owners directly to Bloomberg. The latest data show a sharp increase in production over the last few weeks as Tesla shifted workers from the Model S and Model X factory lines to bolster end-of-quarter Model 3 numbers.
Our standard model is built to resist sudden swings in the data, and there’s plenty of evidence of an end-of-quarter production blitz that has yet to register. So for our final projection, we’re going with Bloomberg’s Trend rate, which is what our model would reflect three weeks from now if production continues apace.
All signs point to a strong finish to an otherwise rough quarter. There were faulty robots at the Nevada battery factory and an idled production line in California. Reservation holders from San Diego to Brooklyn saw their delivery times pushed back.
And last week was particularly bad for the carmaker. Tesla has come under regulatory scrutiny for a fatal crash involving its driver-assistance system Autopilot. Moody’s Investors Service downgraded the company’s credit rating further into junk, saying production problems and mounting obligations could necessitate a more than $2 billion capital raise. Tesla shares dropped much as 8 percent amid a broader market selloff on Monday.
Is It Sustainable?
The peak weekly rate is a crude bar to measure Tesla’s success. Weekly production numbers can be distorted when Tesla makes an unsustainable around-the-clock push. That’s exactly what our model suggests happened at the end of 2017, when Tesla reported that it had reached a production rate that “extrapolates to over 1,000 Model 3’s per week.”
Our model estimates that such a rate wasn't sustained over longer periods until almost three months later. Bloomberg’s model is best suited to estimate cumulative production totals. The standard weekly rate is best for estimating Tesla’s sustained production capacity over time, and the Trend rate is best for catching sudden spikes or slow-downs.
The end-of-quarter surge doesn’t make up for all of Tesla’s first-quarter production woes. Tesla CEO Elon Musk had vowed he would be making 2,500 cars a week by the end of the first quarter—a target that was already scaled back from a prior forecast of 5,000 a week by the end of 2017. Even if Tesla is able to reach its latest production target, it’s not clear whether the company will be able to sustain and build off that number. The Bloomberg model will be worth watching to see how the company lands in April.