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Tesla posts record $671 million loss in Q3

08 November 2017

Now, Elon Musk is keeping vigil at the Gigafactory, where the Model 3 is manufactured, spending most of his waking hours - and then some typically meant for sleeping - there, even conducting Wednesday's call from the plant.

"A subbontractor dropped the ball - and we did not know the degree to which the ball was dropped", he said.

To date, our primary production constraint has been in the battery module assembly line at Gigafactory 1, where cells are packaged into modules.

Some of Tesla's manufacturing lines, including those for drive units, seats, paint and stamping, have the ability to make more than 1,000 cars per week during "burst builds of short duration", they wrote.

Investors had sensed something was awry a month earlier, when Tesla said it had only made 260 of the Model 3 last quarter, well below the nearly 2,000 it had forecasted; some reports said the bottleneck was due to the carmaker assembling the vehicle by hand.

The company said it plans to make 5,000 Model 3 vehicles per week by about March 2018 (a quarter later than initially predicted) and then 10,000 units per week sometime after that.

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Some analysts say the delayed target intensifies concerns around future Model 3 targets, and other dangers to Tesla's future. Tesla would not need a local joint-venture partner requiring it to split profits, but would be subject to a 25 percent import tariff. Tesla notes that it intervened in the process and took over the critical manufacturing process, bringing it in-house from the vendor that developed the process. "Model 3 production process will be vastly more automated than the production process of Model S, Model X, or almost any other car on the market today, and bringing this level of automation online is simply challenging in the early stages of the ramp". Whether its just Elon's shoot for the stars mentality or the reality, Tesla shared that it believes it will be able to improve the line to the point that it will "ultimately be capable of production rates significantly greater than the original specification". In response, the UAW filed unfair labor practice charges against the automaker, claiming the firings were to discourage employees unionize. Overall, the company's stock is up by about 50% for the year.

The company burned through $1.4 billion in cash during the quarter as it continued to invest heavily in manufacturing operations.

The company fired 700 workers in October after performance reviews.

"We had to rewrite all of the software from scratch", Musk said, adding that they'd redone "about 20 to 30 man years of software in four weeks" for the battery module.

The Wall Street Journal reported on Oct. 22 that Tesla had reached a deal with Chinese officials to open a factory in a free-trade zone in Shanghai. These lines include battery pack assembly, body shop welding, and final vehicle assembly.

Tesla posts record $671 million loss in Q3