Tesla’s Production Delays…Again





Tesla’s Production Delays…AgainInvesting.com – Several weeks ago, Tesla (NASDAQ:TSLA) CEO Elon Musk said that the Model 3 sedan was “deep in production hell.” That clearly seems to be the case. Tesla has more than 400,000 orders for the Model 3 sedan, but so far, only 220 cars have been delivered, a far cry from the 1,500 Model 3 vehicles Tesla said they would deliver in the third quarter. As a result, JP Morgan slashed their delivery forecast on Friday for Tesla Model 3’s in the next quarter by 50%, from 30,000 to 15,000 vehicles.Interestingly, just as Tesla would want to ramp up production, they reportedly fired hundreds of workers. Many of the jobs were in sales and administration, but the layoffs also hit the factory floor. Tesla’s Model 3 was hailed as the first mass-market electric vehicle. But big manufacturing delays would take away the company’s first-to-market advantage. There are also concerns that the production bottleneck could be tied to Tesla underestimating production costs. Such sentiments were echoed by Ryan Brinkman, an automotive equity research analyst at JP Morgan, who wrote in a note to clients that “if the vehicle proves structurally more expensive to manufacture…Tesla may need to increase the price of the vehicle to consumers, with negative implications for demand.”It’s probably too early to panic, but keep a close eye on Tesla when they report Q3 earnings on November 1st.


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