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Tesla to sustain Model 3 “burst” production rate in July, suggests online tracker

Tesla’s capability to sustain its rate of manufacturing 5,000 Model 3 per week this third quarter remains in question, but an online tracker by Bloomberg suggests that the Silicon Valley electric car maker is on pace to hit peak production levels in the next few weeks.

Tesla was finally able to manufacture 5,000 Model 3 per week during the final seven days of the second quarter, thanks to a blitz of activity in the Fremont factory. Tesla had to implement a number of unorthodox strategies to achieve the production milestone, including building an entirely new general assembly line inside a massive sprung structure at the grounds of the Fremont factory and air-freighting six airplanes’ worth of robots from Europe. These, together with Tesla’s “burst” build, were considered by critics to be unsustainable.

Doubts about Tesla’s capability to maintain its 5,000/week Model 3 production rate fueled the thesis of the company’s most vocal critics, such as JP Morgan analyst Ryan Brinkman, who wrote that Tesla’s burst production could not be repeated. CFRA Research analyst Efraim Levy also downgraded TSLA to a Sell, stating that the burst rate for Model 3 production is the not “operationally or financially sustainable.” These reservations affected Tesla’s stock (NASDAQ:TSLA), with the company ending the week at $308.88 per share, a significant drop from the near-record highs it achieved earlier in June.

Bloomberg’s Tesla Model 3 tracker as of 7/9/18. [Credit: Bloomberg]

If the current numbers reflected in Bloomberg‘s Model 3 online tracker are any indication, however, it appears that Tesla might just be on track to produce the Model 3 at a sustained rate of the 5,000 vehicles per week. As of this weekend, the online tracker, which was just 2% off its prediction for Tesla’s final Q2 numbers, shows a trend of more than 5,000 Model 3 per week over the next three weeks. Apart from this, production of the compact electric car is also listed at 5,187 Model 3 per week.

Bloomberg‘s Tesla Model 3 production tracker aggregates data from U.S. government resources, social media reports, as well as direct communication with Tesla owners. VINs that are listed in the tracker are either traced depending on Tesla’s own filings during batch registrations, or sightings of Model 3 in the wild. Vehicle Identification Numbers do not directly correspond to the number of Model 3 that Tesla is producing, but Elon Musk himself admitted in the Q1 2018 earnings call that “any  information that (Tesla) provide(s) would be one week or two in advance of what will become public knowledge just due to vehicle registrations and shipments that are tracked very carefully.”

Tesla is now attempting to hit sustained profitability for the first time in its history. During Q2 2018, Elon Musk boldly declared on Twitter that Tesla would start being profitable around Q3 or Q4 2018. During the first quarter earnings call, Musk reiterated this, stating that it was about time Tesla starts showing some earnings. In order to accomplish this goal, Tesla would have to ensure that the Model 3 gets built and delivered at a pace that is sustainable.

Considering the sales numbers of the Model 3, it appears that if Tesla can keep its production rate steady, it would only be a matter of time before the vehicle can help push the company towards profitability. In Tesla’s Q2 2018 Production and Delivery report, the company stated that it had delivered 18,440 Model 3 from April-June 2018. Tesla also had 11,166 Model 3 vehicles in transit to customers by the time the quarter ended, setting up the third quarter for record deliveries and sales. The Chevy Bolt EV, considered as the Model 3’s main rival, had sales of 3,483 vehicles during Q2 2018, 82% less than the Model 3.

Tesla to sustain Model 3 “burst” production rate in July, suggests online tracker
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