Tesla Releases Model 3, Automaker Struggles to Keep Up With Demand

StaffBusiness, IT Management

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Investors were not deterred by Tesla Inc’s latest report of a financial loss said to be the largest in the carmaker’s history. Last week, the company’s share price managed to soar by 8 percent buoyed by positive developments deemed favorable to the electronic auto manufacturer in the long run.

Powering investor confidence in Tesla’s long-term prospects is the announcement that demand for Model 3, the company’s mid-size electric luxury sedan, remains strong. In fact, the carmaker announced that it received around 1,800 orders a day for that particular model, Reuters reported.

Meanwhile, the automaker announced that demand for the pricier Tesla Model S bounced back after a recent decline. CEO Elon Musk even stated that July was “one of the best months ever” for the full-sized luxury car.

With its cars selling like hotcakes, the challenge for Tesla now is how to meet the burgeoning demand. Musk warned investors that the next six months will be a “manufacturing hell” for the company as it struggles to keep up with the 455,000 customers who pre-ordered the Model 3.

The long wait might also become a bit of a turn off for potential Model 3 buyers. Recode reports that if one were to pre-order the car today, it is likely to be delivered by end of 2018. In fact, there were around 63,000 customers who canceled their reservations as the original number of pre-orders was disclosed to be 518,000 cars.

However, Musk assured investors that Tesla is on track to meet the increasing demand. The company now plans to increase its output to 5,000 Model 3 cars a week by the end of 2017. The firm estimates that it will be able to eventually produce 10,000 units weekly by 2018.

But of course, this production capacity increase will come with a price. The company eroded its cash reserves by almost a billion in the first half of this year as it continued to improve its Fremont and Nevada factories.  Deepak Ahuja, Tesla CFO, revealed that it was the firm’s highest spending spree on record with expenses reaching as high as $100 million a week.

But investors remained focused on Tesla’s long-term potential. Despite a planned $2 billion in expenditures on the second half of the year, the company’s share price managed to soar to a high of $386.99 from January to June.

[Featured Image by Tesla]
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