Tesla booked its largest ever quarterly loss of $671.1 million in the third quarter, adding more bad news to the worsening delays of Model 3 production.
Tesla sinks deeper into the red, as it recorded a $336 million loss in the second quarter. With losses piling up and the Model 3 still not rolling off the assembly line like clockwork, Tesla CEO Elon Musk may want to keep the panic button close.
Tesla Model 3 Production Delay
One of Tesla’s goals with the production of the Model 3 was to ramp up the rate to 5,000 vehicles every week by the end of the year. That goal has now been lost, with the rate now being targeted by the end of the first quarter of 2018 due to bottlenecks in the manufacturing process.
The main challenges that Tesla has faced for Model 3 production include the new battery that it is building for the mass-market electric vehicle. An issue with a subcontractor, along with several other problems, has forced Tesla to start from scratch in certain areas.
“We had to rewrite all of the software from scratch,” Musk said, adding that Tesla has rebuilt around 20 to 30 man years of software over a span of four weeks for the Model 3’s battery module. For all intents and purposes, the Model 3 was still deep in “production hell.”
When Musk was asked when Model 3 production is now expected to reach 10,000 vehicles every week, the Tesla CEO refused to state a timeline. That figure is what many analysts believe is they key milestone that will signal the turn to profitability for the Model 3.
Can Tesla Bounce Back?
Profitability, however, is becoming even more elusive for Tesla. For the third quarter, the company’s $671.1 million loss is the biggest that it has ever recorded for a three-month period, and it brings Tesla’s total loss for the first nine months of the year to $1.66 billion.
If Tesla wants to have a shot at profitability, it needs to figure out the Model 3’s production, and it needs to do so quickly.
It would be easy to blame the bottlenecks and the delays of Model 3 production to a variety of factors, including hundreds of Tesla workers fired, but Musk has taken full responsibility for the problems.
“At the end of the day, everything is our fault — and my fault first of all,” Musk said. Investors and customers, however, may be looking for something else beyond ownership of mistakes at this point.