Tesla struggles to ramp up production & delays Model X, again

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Tesla released its third quarter earnings on Wednesday at the close of the market and revealed that it hit a few bumps during the quarter. Tesla didn’t ramp up production as quickly as it had expected during Q3, and the company also said it is delaying shipments of its next Model X car next year by a few months, once again.

This summer, Tesla shut down its factory in Fremont, Calif. to retool manufacturing in order to make it more efficient. Back then, Tesla said it would stop production for about two weeks, so that it could ramp up the rate at which it makes its cars.

Tesla owners take a ride in the new Tesla "D" model electric sedan after Elon Musk, CEO of Tesla, unveiled the dual engine chassis of the new Tesla 'D' model, a faster and all-wheel-drive version of the Model S electric sedan, at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

Tesla owners take a ride in the new Tesla “D” model electric sedan after Elon Musk, CEO of Tesla, unveiled the dual engine chassis of the new Tesla ‘D’ model, a faster and all-wheel-drive version of the Model S electric sedan, at the Hawthorne Airport October 09, 2014 in Hawthorne, California. (Photo by Kevork Djansezian/Getty Images)

But the ramp up took longer than expected, Tesla said, “due to system integration challenges.” As a result, Tesla’s production for the quarter was reduced by almost 2,000 cars. Because of that deficit, Tesla expects to deliver approximately 33,000 vehicles for 2014, which is between 5 percent to 7 percent below its prior estimates for 2014. Tesla said previous projections for 2015 shipments are unaffected.

The company said:

To combat this struggle to ramp up production Tesla said it plans to “simplify our product offering by reducing the number of options and powertrain combinations. This will enhance our ability to scale production in 2015.”

In addition to the lower shipments, Tesla said that it’s yet again delaying the arrival of its crossover SUV mini van, the Model X, until the third quarter of 2015, which is a few months later than previously expected. Tesla has repeatedly delayed the first shipments of this car over the years. This delay was expected.

Tesla robots, courtesy of Tesla.

Tesla robots, courtesy of Tesla.

But, beyond those hurdles, Tesla’s financials were decent. The company beat the street on expectations, causing Tesla’s shares to tick up in after-hours trading.

  • Revenue for the quarter (GAAP) was $852 million, which was up from $431 million for Q3 2013.
  • Net loss (GAAP) was $75 million or $(0.60) per share, which was a larger loss than its $39 million loss at the same time last year.
  • Automotive gross margin (GAAP), Q3, 22.6 percent.
  • R&D expenses for Q3 (GAAP), $136 million.
  • The company delivered 7,785 Model S vehicles.
  • Production for the full year is expected to be about 35,000 car, but shipments at 33,000 (due to the 2K deficit in Q3).

These financial results shed more light on perhaps why Tesla would want to launch the D now, its dual motor, all-wheel-drive version of the Model S. With its Model X delayed again (and perhaps more delays in the future), and its slower ramp up in Model S production, it will have to make up for those sales somehow next year.

2 Comments

Red Sage

Tesla Motors makes a distinction between cars ordered, built, and delivered. Traditional automobile manufacturers list shipments as ‘sales’. That is because their cars are sold to ‘independent franchised dealerships’. Until an end user takes delivery, the sale is not complete for Tesla Motors. Tesla Motors builds cars once they are ordered. Traditional automobile manufacturers build cars to sit on a lot somewhere as inventory hoping for someone to come along and buy them.

Emanuele Franzini

by the way, Tesla Motors is the most important investor with Toyota in this field, and I think(hope) that in the future they will have a good market share in cars global market.

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