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Car and Driver: Tesla Still Finalizing Model 3’s Design, Faces Potential Roadblocks to Production Growth

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2018 Tesla Model 3


As we’ve reported before, Tesla Motors is, financially at least, on stable footing for now as it prepares to significantly ramp up production with its first “volume” model, the Model 3 EV. That doesn’t mean, however, that Tesla doesn’t face some choppy seas going forward, a notion that the company shined a harsh light on in its first quarterly financial filing of 2016, wherein it details numerous potential roadblocks to achieving its production goals and even to completing the Model 3 on time.


The biggest revelation in Tesla’s SEC filings is that the Model 3, which debuted as a complete, drivable prototype last month at a flashy event in California, isn’t finished yet. As Tesla puts it: “Final designs for the Model 3 are not yet complete.” The reasons for the design not yet being frozen, despite the Model 3’s production being scheduled to begin in about a year and a half, aren’t explicitly mentioned. Tesla does note that “various aspects of the Model 3 component procurement and manufacturing plans have not yet been determined, and that it is still working with its suppliers and on the development of its own “efficient, automated, low-cost manufacturing capabilities, processes and supply chains necessary to support [the Model 3's production volumes].” Keep in mind that, for most vehicles, part designs are as influenced by artists’ pens as they are by design engineers and manufacturing limitations; if the assembly processes haven’t been locked in, then neither have the parts’ final spec.


The Model 3’s incomplete design is but one hurdle along the road to Tesla cranking out 500,000 cars annually, a plan that relies heavily on the lower-cost Model 3. Anyone who has followed Tesla Motors’ gestation from startup to fledgling automaker knows that the company hasn’t had the best track record of delivering promises on time. The Model S and Model X were both delayed, and the Model 3 very well could suffer the same fate. Tesla states that “We may experience delays in realizing our projected timelines and cost and volume targets for the production, launch, and ramp of our Model 3 vehicle.” It cites a host of reasons, from its Gigafactory battery plant not being ready, to the production lines for the 3 not being completed in time, to a planned 70 retail stores and service centers failing to materialize in the next year or so.


In spite of the potential roadblocks, Tesla boastfully reiterated in its SEC filing its new plan, announced just this month, to push up its 500,000-car production goal (an annual figure that will include Model S, Model X, and Model 3 production) by two years from 2020 to 2018. As Tesla points out, moving its timeline forward roughly doubles its previous growth plan, which will require a claimed 50-percent increase in capital expenditure over the $1.5 billion it had originally earmarked for calendar-year 2016. The roadmap is nothing if not ambitious, particularly in light of Tesla’s current sales. Despite having only sold a little over 22,000 vehicles last year, the automaker is hoping to increase production in order to push out 80,000 to 90,000 copies of the Model S and Model X by year’s end.


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