Tesla Model 3 Could Be Delayed: Company Posts $671 Million Quarterly Loss

Tesla announced its quarterly result for the third quarter of 2017 on Thursday — the company has booked its largest-ever quarterly loss of $671.1 billion this quarter. The company has already been set back by delays in the production of its first mass-market car, the Model 3 and the quarterly loss on top of that is expected to create financial troubles for it.

“While we continue to make significant progress each week in fixing Model 3 bottlenecks, the nature of manufacturing challenges during a ramp such as this makes it difficult to predict exactly how long it will take for all bottlenecks to be cleared or when new ones will appear,” the company said in its earnings declaration.

The loss is around double of Q2 2017 in which it had posted a loss of $336 million and with Model 3 still not on track; it could definitely affect production further.

Tesla CEO Elon Musk had set an ambitious goal of ramping up production to the rate of 5,000 vehicles every week by the end of the year — that goal now seems to be lost due to the bottlenecks in the production process.

Issues such as ones with the battery of the Model 3, a disagreement with a subcontractor have forced Tesla to go back to the drawing board and start again.

In the earnings call, Musk called Tesla 3 a “production hell.” He stated that the company had to re-write the Model 3 software from scratch and had to build 20-30 years worth of software again, in a period just four weeks.

Upon being asked when the production will be scaled up to 10,000 vehicles per week, Musk refused to provide a timeline. This scaling is important because the car will only become profitable for the company once volumes ramp up to this level. However, the company might be able to reach the goal of producing 5,000 vehicles in the first half of 2018.

While Musk has been very ambitious with Tesla, it seems that profitability may soon not be in the company’s reach — the losses are mounting each quarter and there seems no game plan to turn around the company anytime soon.

Musk did accept the responsibility for Tesla’s current condition in his address to investors.

“At the end of the day, everything is our fault — and my fault first of all,” Musk stated in the call.

Not following up on deadlines is not new for Musk or Tesla — the company has had the same issues with the Model X. However, getting it right with the Model 3 is very important for the company — the $35,000 car is expected to sell in large volumes and bring Tesla up to par with other car makers.

Tesla stock has performed better in 2017 in comparison to car makers such as Ford and General Motors but was down 3 percent post the earnings call Thursday.