Tesla Badly Misses Model 3 Production Goals (wsj.com)

An anonymous reader quotes a report from The Wall Street Journal (Warning: source may be paywalled; alternative source): Tesla badly missed its goal of building 1,500 Model 3 cars in the third quarter, the first sign that the production ramp-up for the new sedan isn't going as smoothly as planned. The Silicon Valley electric-car maker built 260 of the Model 3s between July and September, the company said Monday in a statement. In August, the auto maker predicted it would build more than 1,500 Model 3s before cranking up production to 5,000 a week by the end of the fourth quarter. Tesla blamed "production bottlenecks" for the weaker production. "It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain," Tesla said in a statement. "We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."

Comments

Can someone please explain?

[Okian Warrior]

Can someone explain to me why missing predicted goals - by even as much as 50% - is such a big issue with investors?

Any time Tesla comes out slightly lower than "predicted results" the market analysts go haywire, it's all "doom and gloom! We warned you about Tesla! It's a baaaaaad investment!".

There are people who, with a straight face, talk about Tesla being fraudulent, being 3-months away from insolvent, or being super hyper over inflated in some way. "Look at Tesla's capitalization, and compare it to Ford's!!! There's *no way* Tesla will ever be as big as Ford!"

And Musk is a con man, Tesla only survives because of federal grants and will go under once those grants are revoked, Tesla sells cars at a loss, chewing through investor money...

WTF?

Is there a *rational* explanation for all this bugaboo reporting?

Re: Can someone please explain?

[stephanruby]

I'll be the first to admit. I'm an idiot.

But if I have the choice between buying Tesla stock and Ford stock, I would buy Tesla stock. It's not even a contest.

The stock market is not always rational.

Re:Can someone please explain?

[Michael Woodhams]

I think there are both logical and illogical reasons for being a Tesla bear.

The illogical reasons I am aware of are political. Musk founded Tesla to accelerate the shift from internal combustion engines to electric cars, to help reduce climate change. If you are a climate change denier, you can see this as making him and the company the enemy, therefore he must be a fraud etc. If you are a bit more sane, but still partly inhabit the same echo chambers as the irrational anti-Teslas, you'll have a biased view of the company.

Logically, the price of Tesla stock is way out of whack with their turnover and profits. The price can only be based on the expectation that the company will grow very big very fast. Tesla are investing in plant etc. to try to support growing very big very fast. This is a high risk strategy: a moderate hiccup delays the pay-back on the massive investments, and you have massive debts without sufficient income to service them and lots of disappointed investors bailing and crashing your share price. Tesla might successfully grow, but on the other hand, I wouldn't be terribly surprised if they are bankrupt two years from now. Even Elon Musk has sometimes said that he thinks the Tesla share price is too high.

In general, Musk's track record is that he builds what he says he is going to build, but it takes much longer than he says. There is a risk that, even if from an engineering view point he can eventually deliver, the company needed to deliver the results will go bankrupt first.

Re:Can someone please explain?

[Rei]

Yes, totally a scam. Please short Tesla with your life's savings today and make a fortune ;)

Meanwhile, Musk outright stated that they pick aggressive targets because they know at least some supplier will fail to miss deadlines, and they want to have a way to hold them accountable. The Model 3 deadline was significantly moved ahead of the original plan after so many people made reservations. A month behind because of a couple parts in short supply during a rampup is pretty insignificant.

Re:Sounds like training

[Richard_at_work]

Take a look at Boeings woes with the 787 production, or Airbuses with the A380 - highly trained, experienced workforces on both sides, but significant production issues in both cases.

In the case of the A380, the production models suffered from issues that weren't apparent in CADCAM phases, and in the case of the 787 it was a company fuck up top to bottom (when your fastener supplier says "12 months lead time" 18 months before you need them, you don't leave your order for another 15 months and expect them to deliver in 3...)

Even established companies with serious experience behind them can have issues with a new products ramp up - Tesla isn't unique.

Re:Sounds like training

[Richard_at_work]

Your best bet is to hit the Airliners.net or Pprune forum archives, lots of back story there.

The A380 issues were due to a mismatch between design software versions, resulting in wiring looms being the wrong size - the first few airframes built for development are always basically hand built with tonnes of design changes, but the production issues didn't become apparent until customer cabins were being installed as that meant a huge increase in wiring that needed to be installed. And that wiring simply didn't fit.

The 787 was pushed for a PR rollout on the 8th of July, 2007 - or 7/8/7 in US format. If you look at the photos taken at the time, the aircraft was a shell, despite it supposedly taking to the air later that year (you could see down the length of the cabin through the cockpit windows - there was *nothing* in there). The shell was also put together using fasteners from your local DIY store, not aviation grade ones - they all had to be removed and replaced prior to flight.

Then there was the aviation grade fasteners that were wrongly installed - this resulted in cracking, which had to be repaired, and those fasteners replaced.

And then the "side of body" issue, where the wing connection to the fuselage wasn't strong enough and had to be strengthened.

And the fire on the first aircraft which resulted in damage (specifically a hole in the fuselage).

And the fuselage barrels being delivered from suppliers which were misshapen and had to be reworked.

Boeing changed both the production method *and* technologies involved - moving from a "everything built in the factory on one location" to "fuselage barrels built in separate locations around the world, prestuffed with wiring and cabin outfittings, and simply joined by Boeing on an integration line", as well as moving from a normal aluminium based technology to a CFRP one. Boeing ended up having to buy most of the third party suppliers they had farmed work packages out to.