Tesla records significant loss due to production problems with Tesla Model 3

Tesla recorded a loss of EUR 531 million in the third quarter. These red numbers are largely caused by the production problems with the Model 3. So far, only 222 units of this model have been delivered in the third quarter.

Tesla attributes the delay in production of the Model 3 to, among other things, the highly automated production process that is used for this model. According to the manufacturer, this creates the necessary challenges at the start of production. Tesla indicates that the model itself is relatively easy to make and that the highly automated production process will ultimately lead to higher numbers at lower costs. Tesla states that there are no fundamental problems disrupting production and that progress has been made in solving the teething problems in production.

The manufacturer isn’t detailing the exact nature of the issues, but says some of the delay is due to problems in the production of the batteries. The design of the battery modules and the commissioning of the automated production line turned out to take longer than expected. Part of the production also had to be taken over from suppliers, after which the entire production process had to be set up differently.

The number of 222 Tesla Model 3 cars delivered contrasts sharply with the 25,915 Model S and Model X cars that Tesla delivered in the past quarter. 1500 Model 3 cars were scheduled to roll off the line in the past quarter. Production of the cheaper Model 3 started in early July, at the beginning of the third quarter, and Elon Musk said when he expected that it would be possible to have 20,000 Model 3 models roll off the production line every month from December. According to Tesla, this production number will now only be reached by the end of the first quarter of 2018, if production problems are solved in time.

Tesla previously laid off hundreds of employees, which the manufacturer says had nothing to do with the production problems. The layoffs were said to be related to dissatisfaction with the performance of the employees, but according to several ex-employees there had been no assessments at all on which the layoffs could possibly have been based.

Tesla recorded a profit of 18 million euros in the same quarter of last year. Turnover did increase considerably and amounted to 2.5 billion euros, an increase of 30 percent compared to the previous quarter. For the fourth quarter, the company expects to invest approximately 850 million euros in the Model 3 production line, battery production and expanding its sales network. On November 16, the new Tesla Semi, an electric truck, will be unveiled.