While Tesla Motors continues to struggle with regards to the assembly of its much awaited Tesla Model 3, investment firm Oppenheimer & Co. is confident that its previous production estimates of the mid-size all-electric sedan would still be reached by the end of 2017.
There is no denying that Tesla is still ramping up production of the new Model 3, but previous reports had indicated that production woes have been bugging the electric carmaker. In its previous estimates, Oppenheimer said Tesla would be able to produce 3,005 units of the Model 3 in 2017. Considering reports that Tesla managed to deliver more than 200 units of the Model 3 sedan in the third quarter, the company would have to deliver around 2,800 examples of its newest offering in the current quarter covering October, November and December 2017.
While Tesla hasn’t updated its delivery guidance, Oppenheimer is expecting the carmaker to deliver 100,056 vehicles in 2017 – encompassing all its offerings like the Model S, Model X and Model 3. Tesla is aiming to produce around 5,000 vehicles per week in December.
Despite Oppenheimer’s optimism, production of the new Tesla Model 3 is indeed hitting some bumps, if we take into account the statements made by Elon Musk, Tesla’s chief executive, months ago. Musk had written that the first 30 units of the Model 3 would be delivered to customers in July. He remarked that after that, production of the Model 3 would grow exponentially, and Tesla would be able to deliver 100 cars in August and over 1,500 units in September. This means that in the third quarter of 2017, Tesla should have produced and delivered 1,630 units. In reality, over 200 units have reached customers.
As to why Oppenheimer retained its previous estimates, a company analyst in the persona of Colin Rusch may have the answer. Rusch, along with other investors, recently had a meeting with Tesla. In a note, Rusch wrote that Tesla has assured that all the production equipment for Model 3 is already installed and working, with vehicles already moving through the production line. He added that Tesla indicated that the delay in the ramp up was because of the failure of a small number of suppliers to deliver on time. Rusch added that at least one supplier has received the boot and has been replaced by insourcing.
It was believed that this company was German automotive supplier SHW Automotive, which had disclosed that a customer – presumed to be Tesla -- had canceled a EUR100-million ($107 million) order for axle-drive pumps. Musk had earlier warned that Tesla would implement a rigorous sourcing program both with internal teams and suppliers. He added that suppliers should meet the set high standards and deadlines; otherwise they would be fired.