Tesla Moves the Goalposts Again as Fourth Quarter Model 3 Deliveries Fall Short

To hear Tesla explain it, the fourth quarter of 2017 was a boffo month for the company, with record deliveries and a new product that’s really hitting its stride.

It’s true that 1,550 customers took delivery of a Model 3 in the past three months, after the previous quarter saw just 220 of the lower-priced electric sedans roll into driveways. Overall deliveries rose 9 percent from Q3, for a tally of 29,870 vehicles. It sounds good, but the company, like before, still isn’t making enough Model 3s.

As it continues working through supply and assembly line issues, Tesla has pushed back its goal for 5,000-vehicle-a-week Model 3 production for the second time.

Last year, Tesla assured us it could reach the goal by the end of the calendar year. As problems mounted on the production line, that target moved to the end of the first quarter of 2018.

In yesterday’s quarterly production report, the automaker stated this:

“As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2.”

Looking at it another way, Tesla’s fourth quarter performance wasn’t all that hot. In terms of production, 24,565 vehicles rolled out of the Fremont, California assembly plant in the last quarter, some 2,425 of which were Model 3s. In the preceding quarter, production volume reached 25,336 vehicles.

Tesla explains that it “slightly reduced Model S and X production in Q4 because of the reallocation of some of the manufacturing workforce towards Model 3 production, which also caused inventory to decline.”

Where does the pushback of Tesla’s 5,000-a-week target leave the company’s 10,000-a-week goal? It’s anyone’s guess. That goal is absent from the most recent report. In its Q3 report, in which Tesla remained committed to hitting 5,000 Model 3s by the end of 2017, the automaker claimed the 10,000-a-week target would be met at some point in 2018.

As it stands now, Tesla claims the last few days of the last week of December saw Fremont “hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3’s per week.”

Non-employee Model 3 reservation holders already faced a long wait, and the new production targets could give some of them pause. Tesla fanatics, as we all know, will wait until the end of time to take delivery, and there’s nothing Tesla can do to shake their confidence in the company. Still, analysts aren’t nearly as forgiving.

In the fourth quarter, Tesla delivered less than half the Model 3s that analysts expected (4,100 was the prediction there). Speaking to Reuters, Evercore analyst George Galliers said, “The further delay to (production volume) will leave analysts and investors focused on the implications for cash as we head through the first half of the year.”

Tesla share prices fell 2.3 percent before the close yesterday, falling further in after-hours trading.

[Image: Tesla]