Yes, we know. Elon told us Tesla would be cranking out 5,000 or more Model 3s a week by the end of 2017. That didn’t happen. In fact, deliveries of Tesla’s newest model for the quarter barely moved the needle at 1,550 for the quarter, with another 860 classified as in transit. Tesla does not count cars as sold until they are paid for, all the paperwork is completed, and they are actually in a customer’s hands.
According to a Tesla sales report sent our way earlier today, 15,200 Model S sedans and 13,120 Model X SUVs found new homes in the fourth quarter. That’s up 27% over Q4 last year and 8% over Q3 this year. It also marks the 4th quarter of 2017 as the best ever for the company. For the year, Tesla delivered 101,312 vehicles, a third more than the previous year and slightly ahead of its guidance provided to stock analysts.
Despite the overall good news, Tesla stock slid by just over 1% on Wednesday. Some investors are obviously disappointed by the Model 3 production numbers as the company continues to slog through what it calls “production hell.” In its quarterly newsletter, it addressed that issue, promising that it is continuing to address bottlenecks and glitches in the assembly process.
“In the last seven working days of the quarter, we made 793 Model 3’s, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3’s per week. As a result of the significant growth in our production rate, we made as many Model 3’s since December 9th as we did in the more than four months of Model 3 production up to that point,” Tesla wrote. “Model 3 deliveries to non-employee customers are now accelerating rapidly, and we’re confident our customers will love them.”
Tesla reminded people that it intends to focus on building high-quality cars rather than “pushing for the highest possible volume in the shortest period of time.” It says it will continue to gradually ramp up Model 3 production in the first quarter of 2018. The target is 2,500 cars a week by the end of March and 5,000 per week by the end of June.
The Tesla haters and short sellers are whooping it up because Model 3 production numbers are not meeting expectations (the last official target, shared on November 1, was “a production rate of 5,000 Model 3 vehicles per week by late Q1 2018,” not Q2 2018), but Tesla will get its act together in due course. The overshadowed and highly positive news is that sales of its traditional cars continue to climb. Earlier this year, some analysts were saying it would be unable to sustain sales of the Model S and Model X once the Model 3 became available. It’s always nice to see the doubters get their comeuppance.
The following was Tesla’s full press release.
Tesla Q4 2017 Vehicle Production and Deliveries
PALO ALTO, Calif., Jan. 03, 2018 (GLOBE NEWSWIRE) — In Q4, Tesla delivered 29,870 vehicles, of which 15,200 were Model S, 13,120 were Model X, and 1,550 were Model 3. This was once again our all-time best quarter for combined Model S and X deliveries, representing a 27% increase over Q4 2016, and a 9% increase over Q3 2017, our previous best quarter.
In total, we exceeded our previously announced guidance by delivering 101,312 Model S and X vehicles in 2017. This was a 33% increase over 2016.
In addition to Q4 deliveries, about 2,520 Model S and X vehicles and 860 Model 3 vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q1 2018.
Q4 production totaled 24,565 vehicles, of which 2,425 were Model 3. As we previously indicated, we slightly reduced Model S and X production in Q4 because of the reallocation of some of the manufacturing workforce towards Model 3 production, which also caused inventory to decline.
During Q4, we made major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter. In the last seven working days of the quarter, we made 793 Model 3’s, and in the last few days, we hit a production rate on each of our manufacturing lines that extrapolates to over 1,000 Model 3’s per week. As a result of the significant growth in our production rate, we made as many Model 3’s since December 9th as we did in the more than four months of Model 3 production up to that point. This is why we were not able to deliver many of these cars during the holiday season, just before the quarter ended. Model 3 deliveries to non-employee customers are now accelerating rapidly, and we’re confident our customers will love them.
As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time, we expect to have a slightly more gradual ramp through Q1, likely ending the quarter at a weekly rate of about 2,500 Model 3 vehicles. We intend to achieve the 5,000 per week milestone by the end of Q2.
We’re very grateful to everyone at Tesla who has poured their heart and soul into helping with the Model 3 ramp and creating the progress we are seeing. We’re also very appreciative of our Model 3 customers, who continue to stick by us while patiently waiting for their cars.
Our delivery count should be viewed as slightly conservative, as we only count a car as delivered if it is transferred to the customer and all paperwork is correct. Final numbers could vary by up to 0.5%. Tesla vehicle deliveries represent only one measure of the company’s financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles.
Certain statements herein, including statements regarding future production of Model 3, are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations. Various important factors could cause actual results to differ materially, including the risks identified in our SEC filings. Tesla disclaims any obligation to update this information.
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