S-CURVE

Tesla Model 3 production falls short of expectations after hitting production snags

Tesla hopes its $35,000 Model 3 will make electric vehicles America’s main form of transportation. It’s off to a slow start.

The company said on Oct. 2 it had produced only 260 Model 3s at its Fremont, California plant in the third quarter, well short of Tesla CEO Elon Musk’s plan to roll 1,600 off assembly lines by the end of September. That means the automaker will need to push harder to achieve its goal of building 5,000 Model 3 vehicles per week by the end of 2017, and at least 500,000 vehicles of all models annually by 2018. Overall, it delivered 26,150 vehicles in the third quarter, up 17.7% from the same period last year.

Tesla has yet to produce more than about 100,000 cars in a single 12-month period. Critics point out that the company’s unprecedented rush to ramp up production puts it at risk of delays and costly recalls if quality issues arise. Tesla has skipped many of the incremental steps used by established carmakers when launching new products.

Tesla’s Oct. 2 investor letter blamed Model 3 delays on “production bottlenecks” from manufacturing subsystems taking longer to activate than expected. “It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,” Tesla wrote. “We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.”

Musk has often described an “S-curve” for Tesla’s production plan in which small batches of vehicles lead to rapid expansion of volume and then level off. Both the Model S and Model X have followed similar trajectories. The Model 3 will be on a much larger scale.

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