Tesla can't ramp up Model 3 production until 2018

  • Tesla can't ramp up Model 3 production until 2018

Tesla can't ramp up Model 3 production until 2018

As of this writing, shares are down to $306.97 in after-hours trading.

The company has about $3.5 billion entering the fourth quarter to make it happen.

"The primary production constraint by far is in battery module assembly", said Musk, who said he has been working out of the Gigafactory in order to be closest to the largest problems in Tesla's production line. Rating what he himself has described as "production hell" on a scale of one to nine, where "level nine is the worst", Musk admitted that he'd struggled to persevere through the difficulties.

Tesla went into a bit more detail about the production challenges it faces with the Model 3 in its letter to investors on the heels of its earnings report for Q3 today. Software had to be rewritten from scratch and mechanical and electrical elements of one area of the plant had to be redone. An increased reliance on automation has also made it more difficult to use human labor to fill in for faulty machines. "In the grand scheme of things", Musk said, "this is a relatively small shift".

Tesla has also grappled with its labor force.

The 700 workers canned from Tesla were from a workforce of 33,000.

The company said Wednesday that milestone is being kicked ahead another three months, to the end of the first quarter of 2018.

The deadline pushback and a whopping $619 million loss in the third quarter dented Tesla shares - dropping them more than 21 percent below their 2017 high, putting them firmly in bear market territory. Highlighting the complexity of juggling a production ramp across not just a global supply chain but across literally dozens of individual production lines that are effectively prototypes, Tesla shared that some manufacturing lines have only demonstrated a throughput rate of 500 units per week.

However, according to a class-action lawsuit, those features have yet to arrive, and Tesla's breakup with computer vision and camera sensor supplier Mobileye may have set back the automaker's progress.

The company did not give an update on when the cross-country drive would occur or when updated self-driving features would be available, but reiterated that all Tesla vehicles are capable of full autonomy with the current hardware suite. He recalled being on the assembly line at 2 a.m. on a Sunday to help diagnose robot calibration issues and said work was being done seven days a week to solve the problems vexing the gigafactory.

Tesla told Reuters it is still in talks for a factory in China. They even discuss the underside of the vehicle. "The Model 3 is a ten-year program".

Tesla brought its own top engineers in to focus on the battery module manufacturing automation to "fine-tune the automated processes and related robotic programming". We already know that Tesla shipped only 222 Model 3 vehicles during the quarter, since it releases sales numbers earlier than it reports earnings.