Investor's Corner
Tesla Model 3 delays due to battery module assembly line
Tesla has confirmed that the source of its Model 3 production bottleneck is the battery module assembly line at its $5 billion Gigafactory 1 facility in Sparks, Nevada. The Silicon Valley electric car maker noted in its third quarter 2017 earnings report that the manufacturing process for Model 3’s battery modules – processes that were “done by manufacturing systems suppliers” – were taken over and “significantly redesigned” by Tesla, thus causing the delays.
“To date, our primary production constraint has been in the battery module assembly line at Gigafactory 1, where cells are packaged into modules.” reads the statement from Tesla in its update letter. Furthermore, Tesla says engineering talent at the company have been redirected to fine-tune the automated processes involved with battery module production, noting that these were key elements of which were “done by manufacturing systems suppliers”. This is one of the primary reasons why only 260 Model 3 vehicles have been produced at the end of the third-quarter. Tesla did not provide any guidance on how this will translate into end of year Model 3 production numbers, but did note that throughput is expected to increase substantially in November. The company also noted that Model 3 volume production of 5,000 vehicles per week is expected late in the first quarter of 2018, delayed three months from CEO Elon Musk’s original end of year guidance.
Like the Model S and Model X which uses a low-mount battery pack that’s made up of individual lithium-ion cells that are packed into battery modules, Model 3 utilizes the same design for its skateboard-style battery pack but with fewer modules. Tesla’s mass market-intent vehicle uses a larger 2170 form factor cylindrical cell versus Model S and X that utilize a 18650 lithium-ion cell that resembles a traditional AA battery. Taking a look at a Tesla battery pack teardown video that we shared in the past, we can see that Tesla arranges Model S and X battery cells into 16 modules that are inserted into an aluminum battery case. Model 3 on the other hand utilizes only 4 modules, thereby arranging more battery cells into larger compartments.
Model 3 production constraint is related to the automated processes that’s responsible for manufacturing two of the four Model 3 battery modules. “Four modules are packaged into an aluminum case to form a Model 3 battery pack. The combined complexity of module design and its automated manufacturing process has taken this line longer to ramp than expected. The biggest challenge is that the first two zones of a four zone process, key elements of which were done by manufacturing systems suppliers, had to be taken over and significantly redesigned by Tesla.” said Tesla in its update letter.
Musk added additional color during the Q&A call with analysts following the update letter, citing challenges faced by the programs that operate the robots in Model 3’s battery assembly line. “We had to rewrite all of the software, from scratch. We managed to write 20 to 30 man-years of software in 4 weeks.” said Musk in explaining the level of reprogramming needed on the factory floor.
Both Musk and CTO JB Straubel reasserted that Model 3’s design is vastly less complex than Model S and X, and built with high volume production in mind. “The initial phase of manufacturing in any new vehicle is always challenging, and the Model 3 production ramp is no exception,” said Tesla.
Because the production process for Model 3 is highly automated, any misconfiguration or general issue around a specific machine in the process becomes amplified across all other machines that rely on it. There’s less tolerance for errors in an automated process, explained Musk. Once Tesla fixes many of the mechanical and electrical issues that it’s currently facing, production ramp up will scale exponentially. Conversely, Model S and Model X production was far less automated, which served as a double edged sword: Tesla was able to quickly address issues in the production process by increasing the number of human labor hours involved, but at the expense of reaching a finite production level.
Tesla Model 3 production is expected to reach 5,000 units per week in the first quarter of 2018, but achieving its originally planned 10,000 units produced per week “sometime in 2018” still remains unclear.
Tesla has its answer to grow its automotive sales over the next few years, TD Cowen analyst Itay Michaeli says, but it just has to bring it to the U.S.
On Thursday, Michaeli reiterated his $490 price target and the ‘Buy’ rating he already held on Tesla stock (NASDAQ: TSLA). However, its automotive division has struggled to show sequential growth over the past few years, mostly due to its focus on AI and Full Self-Driving. Tesla already axed two of its lower-volume vehicles with the Model S and Model X earlier this year.
However, Tesla does not need to engineer an entire new vehicle to trigger an upward tick in sales; it just has to bring it from China to the U.S., Michaeli said.
He is talking about the Model Y L, a slightly larger version of the all-electric crossover that is already available in China. U.S. customers have been pleading with CEO Elon Musk to bring it to the country since its launch in Asia last year, but he’s not convinced of it because of the advent of self-driving and its importance in this particular market.
The problem is that Tesla owners have been requesting something larger that could fit a typical American family. The Model Y L is slightly larger than the standard Model Y, but some are concerned that it could still be too small to fit what most people might need.
Instead, they have asked for a full-size SUV from Tesla.
Tesla gives big hint that it will build Cyber SUV, smaller Cybertruck
Nevertheless, the Model Y L still presents a great opportunity for Tesla in the U.S., and Michaeli says that there is an additional sales opportunity of about 100,000 units, with demand potential falling somewhere between 60,000 and 135,000 units.
TD Cowen’s note to investors also analyzed that Tesla’s growth could come from a stock perspective as well, positively impacting the stock price, as it has been widely reliant on vehicle sales, even though Tesla has truly phased itself away from that being an important metric.
Tesla stands to gain greatly from the introduction of the Model Y L in the U.S., but only if Elon Musk sees it as a viable fit for the market. Families may need to see Tesla bring something larger to the U.S., or they might be forced to buy from another automaker that offers something that fits is needs for more interior space to haul around the kids.
Elon Musk
SpaceXAI just launched into your kitchen with their new app
SpaceXAI just powered its first consumer app and it predicts what you want to buy.
SpaceXAI just made its first move into consumer AI, and it involves your grocery cart. On June 3, 2026, Gopuff and SpaceXAI announced the launch of Go, a Grok-powered shopping assistant built directly into the Gopuff app that predicts what you need before you even start searching for it.
Gopuff is an instant delivery platform that operates more than 400 micro-fulfillment centers across the U.S., delivering everyday essentials, snacks, drinks, and household items in as little as 15 minutes. It is not a restaurant delivery app or a marketplace. It owns its inventory, controls its warehouses, and handles its own logistics, which means it has built one of the most detailed consumer behavior datasets in retail over its 13-year history.
Go combines SpaceXAI’s advanced reasoning, voice, and image generation models with Gopuff’s dataset of hundreds of millions of orders and real-time cultural signals from X to prepare a suggested cart the moment a customer opens the app. It learns each shopper’s habits and automatically builds a personalized cart based on time of day, location, order history, and real-time indicators. Returning customers can check out with a single tap.
Rather than searching for specific items, users can describe a situation like a game-day party or the desire for a healthy breakfast and Go will assemble a cart automatically. It can also predict when shoppers are running low on items like coffee or paper towels and have them packed and delivered in under 15 minutes. Grok voice integration lets users talk to the app in plain conversational language and check out completely hands-free.
Gopuff co-founder and co-CEO Yakir Gola said: “Today, we believe the greatest friction left in commerce is not delivery or instantaneous access to the essentials customers need. It’s the moment before: the thinking, the deciding, the remembering. We’re combining Gopuff’s demand intelligence with xAI’s frontier reasoning to create an everyday shopping experience that feels like a true extension of you.”
Why SpaceX just made a $60 billion bet on AI coding ahead of historic IPO
The timing carries context beyond the product launch. SpaceXAI was formed after SpaceX completed an all-stock merger with Elon Musk’s xAI earlier this year, folding one of the most advanced AI labs in the world into the same corporate structure as the company preparing what could be the largest IPO in history. SpaceXAI is dipping into consumer-focused AI just as it prepares for its public debut, and while Musk has openly discussed building an everything app, this launch uses Grok to power another company’s product rather than launching a standalone consumer platform. Every consumer-facing deployment of Grok ahead of the IPO roadshow adds tangible evidence that SpaceXAI is not just an infrastructure play but a direct competitor in the AI application layer where OpenAI and Google are already fighting for dominance.
Elon Musk
SpaceX’s amended S-1 is sparking a major Tesla merger conversation
A single line in SpaceX’s amended S-1 just sent Tesla stock down 5% in one day.
A single line buried in SpaceX’s amended S-1 filing is doing more to move Tesla’s stock price than anything Tesla itself has announced in months. The clause, disclosed as SpaceX prepares for what could be the largest IPO in Wall Street history, states that the company “may issue a significant amount of equity in connection with future transactions.” While this may be seen as boilerplate language in S-1 filings, the historical ties between SpaceX and Tesla, and with Elon Musk reportedly discussing a possible merger with close colleagues, investors are interpreting it as something closer to a signal.
The concern among institutional investors like Gary Black, managing director of The Future Fund, pointed directly to the amended filing on X, saying it “strongly suggests more SPCX equity will be issued,” which could potentially be used to acquire Tesla. He estimated such a deal could be 28% dilutive to Tesla shareholders since SpaceX would likely command a significantly higher valuation multiple. Black added that institutional investors he knows hate the idea of a combination because they prefer pure plays over conglomerates, which he said “nearly always gravitate to the lowest common multiple.”
The Tesla and SpaceX merger everyone is talking about is quietly building
The bull case runs the math differently. Tesla influencer and retail shareholder advocate AleXandra Merz pushed back on what she called a widespread misunderstanding of how merger-of-equals deals actually work. Rather than simply splitting the difference between two market caps, a merger exchange ratio is negotiated based on relative fair market values, meaning the lower valued company typically sees its stock reprice upward toward the deal value.
Under her model, SpaceX enters at a $2.5 trillion valuation and Tesla at $1.6 trillion, producing a combined entity worth $4.1 trillion split evenly between both shareholder groups. That implies Tesla’s side of the deal would be valued at $2.05 trillion, a gain of roughly $450 billion from its current market cap. She cited Dow-DuPont and CBS-Viacom as historical examples of how markets reprice both companies toward the announced exchange ratio after a deal is unveiled.
What does a Merger of Equals mean to Elon’s compensation packages?
Well, it changes everything.
Enjoy https://t.co/uekCldyITw pic.twitter.com/kolq1C9qTu
— AleXandra Merz 🇺🇲 (@TeslaBoomerMama) June 1, 2026
The SpaceX S-1 amendments also revealed just how much financial infrastructure already binds the two companies together. As Teslarati has reported, SpaceX purchased $697 million in Tesla Megapacks, $131 million in Cybertrucks, and the two companies have shared supply chain resources, and semiconductor fabrication plans since well before any merger conversation became public. A retail poll by Tesla influencer Sawyer Merritt is finding that 36% of respondents do not plan to buy SpaceX shares at IPO and 15.3% saying their decision depends on the valuation.
Do you plan on buying @SpaceX stock at its IPO?
— Sawyer Merritt (@SawyerMerritt) June 1, 2026
Whether the merger happens or not, the amended filing is seemingly moving markets and sharpened a debate that is no longer theoretical. SpaceX is weeks away from trading publicly, and Tesla shareholders are now watching every word of every filing for clues about what Musk plans to do next.
Tesla Model 3 has a tasty Supercharging incentive, but it’s ending soon
Ferrari CEO’s self-driving stance echoes Elon Musk’s — sort of
