June 18, 2019
On May 22, Tesla CEO Elon Musk said in an email to the electric-car maker's employees that they needed to consistently produce 1,000 Model 3 sedans per day for the rest of the second quarter to set a record for vehicle deliveries in one quarter. The current record, 90,700 vehicles, was set during the fourth quarter of 2018.
Tesla Model 3 goal not met, leaked documents suggest
Documents viewed by Business Insider suggest Tesla did not meet Musk's goal in the weeks after he sent the email.
According to documents that describe the daily output rate for one segment of Model 3 production in Fremont, California, output reached at least 1,000 units per day just once in the weeks following Musk's May 22 email. During that period, the average output for that segment was about 700 units per day.
Tesla did not respond to a request for comment.
Daily output rates for one part of the production process do not necessarily correspond with final production numbers on a given day because vehicles must go through other steps that may operate at different speeds. But output for one production segment gives a sense of the upper limit for the entire production process, since each vehicle must go through certain steps before final assembly.
An increase in daily production rates during the final weeks of June would not be unprecedented. Tesla made more than 5,000 Model 3s in one week for the first time at the end of the second quarter in 2018 but averaged around 2,200 Model 3s per week during the entire quarter. During the third quarter of 2018, the company made 5,300 Model 3s during the final week while averaging about 4,100 per week.
On June 11, during Tesla's annual shareholder meeting, Musk said the company had a "decent shot" of breaking its quarterly delivery record. The internal documents indicate that Tesla will have to increase Model 3 production rates during the final weeks of June to do so, based on the criterion Musk described in his May 22 email.
Tesla's second-quarter delivery numbers will face particularly intense scrutiny because the company's first-quarter deliveries fell well below those of the prior quarter. Some analysts said the disappointing first-quarter numbers suggested a decrease in demand for Tesla's vehicles, but the company blamed logistical challenges related to international deliveries and seasonal trends.
Strong second-quarter delivery numbers, even if they don't set a company record, could restore confidence in the demand for Tesla's vehicles and help push the company back to profitability. (Tesla estimates it will be profitable in the third quarter but not in the second.)
Weak delivery numbers could intensify concerns about demand and the company's chances of achieving consistent profitability. Tesla has produced four profitable quarters in its 16-year history, including two in the second half of 2018, when delivery numbers reached record highs.
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