tesla model 3

Tesla ‘on track’ to begin building Model 3 in July

In Technology News by 365reality

Tesla has reported a loss for the last three months of 2016 – but revealed production of its much anticipated Model 3 is still on track.

Tesla posted its first profit in three years in last year’s third quarter and had predicted net income in the fourth quarter, but instead, Tesla lost $121.3 million, or 78 cents per share, for the quarter.

However, it told investors ‘ Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018. ‘

Tesla will shut down production at its California assembly plant for a week this month to prepare for production of its high-volume Model 3 sedan. Elon Musk has boasted the firm’s production facility for its much anticipated Model 3 will look like an ‘alien dreadnought’.

The firm also revealed ‘Later this year, we expect to finalize locations for Gigafactories 3, 4 and possibly 5’ adding to the firm’s Nevada Gigafactory 1 and its New York Solar plant, which is known as Gigafactory 2.

Without one-time items Tesla lost 69 cents per share.

Analysts polled by FactSet predicted a loss of 53 cents per share. Revenue rose 88 percent to $2.28 billion, beating estimates of $2.22 billion.

Shares rose nearly 3 percent in after-hours trading and have jumped more than 50 percent since early December.

The company said Wednesday that it expects to start making its $35,000 Model 3 in July, with higher-volume production by September.

That’s consistent with previous guidance that Model 3 deliveries would start in the second half of this year.

Fourth-quarter results included the acquisition of solar panel maker SolarCity from the close of the purchase on Nov. 21, Tesla said.

The company reported $131.4 million in revenue during the quarter from its energy generation and storage businesses.

The slick design features one continuous pane of glass in the rear roof area, which Musk said will give passengers amazing headroom and a ‘feeling of openness’

Production of Tesla’s two current vehicles, the Model S Sedan and Model X SUV, increased 77 percent during the quarter to 24,882, the company reported.

Sales rose 27 percent from a year ago to 22,252.

For the full year, Tesla reported a net loss of just under $675 million, or $4.68 per share.

Full-year revenue rose 73 percent just over $7 billion, surpassing estimates of $6.9 billion.

Tesla said it expects to deliver between 47,000 and 50,000 Model S and Model X vehicles in the first half of this year, which would be as much as a 71 percent increase over a year ago.

THE ALIEN DREADNOUGHT

Elon Musk has boasted the firm’s production facility for its much anticipated Model 3 will look like an ‘alien dreadnought’.

Musk has said the facility, which is separate from the firm’s ‘Gigafactory’, will be ‘the machine that makes the machine,’ and told analysts it will stun people.

‘It’s like, ‘What the hell is that?” said Musk.

Musk revealed  the in-house term for the manufacturing advancement he hopes to introduce is ‘alien dreadnought.’

‘The point at which that’s what the factory looks like, that’s when you know you’ve won.’

Musk has said the facility, which is separate from the firm’s ‘Gigafactory’, will be ‘the machine that makes the machine,’

He also revealed the line will evolve in stages.

‘By version 3, it won’t look like anything else,’ he said.

‘You can’t have people in the production line itself, otherwise you drop to people speed.

‘So there will be no people in production process itself.

‘People will maintain the machines, upgrade them, and deal with anomalies.’

However, there will  still be people working in the factory, though, mostly overseeing the robots and making sure everything is running at peak efficiency.

 Solar roof production is expected in the second half of the year, and Tesla says it’s on track to generate $500 million in cash by 2019 in its energy generation and storage businesses.

Tesla said it plans to reduce costs to solar customers by cutting advertising spending, shifting away from leasing solar systems and selling solar cells in Tesla stores.

The company also expects to make $2 billion to $2.5 billion in capital investments before it starts Model 3 production.

Tesla earlier said it will shut down production at its California assembly plant for a week this month to prepare for production of its high-volume Model 3 sedan, moving the company closer to meeting its target to start production in July.

Tesla said the ‘brief, planned’ pause would allow the company to add capacity to the existing paint shop to prepare it for the Model 3, and other general maintenance.

‘This will allow Tesla to begin Model 3 production later this year as planned and enable us to start the ramp towards 500,000 vehicles annually in 2018,’ said a Tesla spokesman. 

HOW DOES TESLA’S NEW AFFORDABLE CAR COMPARE TO THE MODEL S?

MODEL S

Price: From £47,600 ($68,350)

Safety features: Autopilot

0–60mph: 2.8 seconds

Power source: 70kWh / 90kWh battery

Range: 340 miles (547km)

Capacity: 5 adults (2 additional children’s seats)

Charge time: 5–6 hours (full charge) / 20 mins (half charge on supercharger)

Source: Tesla

MODEL 3

Price: From $35,000 (£24,375)

Safety features: Autopilot

0–60mph: Less than 6 seconds

Power source: To be confirmed

Range: 215 miles (346km)

Capacity: 5 adults

Charge time:To be confirmed

Source: Tesla

He added that the pause was not expected to have a material impact on first-quarter production or delivery figures, as the company had added production days to compensate.

Separately, sources told Reuters that the luxury electric carmaker planned to begin test-building the Model 3 on Feb. 20.

Tesla Chief Executive Elon Musk last year told investors and more than 370,000 customers who put deposits down for a Model 3 that he intended to start building the cars in July 2017.

At the time, many analysts and suppliers said the timeline was too ambitious and would be difficult to achieve, pointing to Tesla’s history of missing aggressive production targets.

If Tesla succeeds in starting pilot production of the sedan at its factory in Fremont, California on Feb. 20, as people familiar with the matter told Reuters, the company would be able to share the news with shareholders two days later when it reports fourth-quarter results and better answer any questions about the Model 3 rollout.

The sources did not know how many of the highly anticipated vehicles Tesla aimed to build in February, but it would likely be a small number to test the assembly system and the quality of vehicle parts.

‘What better way to stoke the fan base and Wall Street than to wheel out pre-production models’ ahead of the earnings announcement, said one person familiar with Tesla’s plans who spoke on condition of anonymity.

The Tesla spokesman declined to comment on the company’s production schedule.

Musk had told investors last year that the company could miss the July 2017 startup target if suppliers do not meet deadlines.

Tesla has a lot riding on the Model 3, which is priced at roughly $35,000 before government incentives. If successful, the sedan could raise Tesla beyond a niche luxury player in the automotive sector.

Tesla has not had a profitable year since going public in 2010, though the company’s $41.4 billion market capitalization now equals that of Nissan Motor Co Ltd, which reported a profit of $4.7 billion last year.

TESLA BY NUMBERS

Skeptics are waiting to see if Musk can fulfill his promise of producing 500,000 cars per year by 2018.

That would expand Tesla’s annual production by four to five times compared to 2016 levels. In its fourth quarter, Tesla produced 24,882 vehicles.

Tesla disclosed in May that it had taken 373,000 refundable $1,000 deposits for the Model 3, underscoring its appeal ahead of production.

The company has not since updated that number.

Total sales of fully electric vehicles last year in the United States amounted to just 84,275 vehicles, according to data compiled by the Electric Drive Transportation Association.

 Musk’s bold approach to cars, space exploration and clean energy has fueled investor enthusiasm for Tesla, but skeptics are waiting to see if Musk can fulfill his promise of producing 500,000 cars per year by 2018.

That would expand Tesla’s annual production by four to five times compared to 2016 levels. In its fourth quarter, Tesla produced 24,882 vehicles.

Tesla disclosed in May that it had taken 373,000 refundable $1,000 deposits for the Model 3, underscoring its appeal ahead of production.

The company has not since updated that number.

Total sales of fully electric vehicles last year in the United States amounted to just 84,275 vehicles, according to data compiled by the Electric Drive Transportation Association.

Sources with knowledge of the Model 3 timeline had called it extremely aggressive, with challenges compounded by Tesla making last-minute changes to the car’s design.

Such design tweaks can delay production, and add cost as suppliers rework tools and molds to meet new specifications.

Musk said in July the design of the Model 3 was complete.

The car, he told shareholders earlier in May, would be ‘easy to make’ and free of the complicated design that led to production delays in the Model X sports utility vehicle.

It is common practice for automakers to make minor adjustments to a ‘finished’ design for a variety of reasons, ranging from fit and finish to safety.

One source said last week that design changes were still underway for the Model 3, which could potentially hinder the ramp-up to full production.

Tesla’s first car, the Roadster, was the first highway legal serial production all-electric car to use lithium-ion battery cells, and the first production all-electric car to travel more than 200 miles (320 km) per charge.

Tesla declined to comment on whether the design was still being tinkered with.

Tesla’s previous launches for the Model S sedan and Model X sports utility vehicle were marked by production delays and initial quality issues.

That track record meant some analysts were skeptical that Musk would launch production by July.

‘We assume 0 Model 3 deliveries in ’17,’ Barclays analyst Brian Johnson wrote in a Jan. 3 note, while Morgan Stanley’s Adam Jonas in a Jan. 19 note said he expected a ‘soft launch’ of the Model 3 to be delayed until late 2017.

 

Source: Tesla ‘on track’ to begin building Model 3 in July