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We may look back on Q2 2018 as the make or break period for Tesla. If you are an investor, now is the time to call your broker, place your bets, and buckle up. It could be a bumpy ride.


Musk Breaks Out His Sleeping Bag Again, Adds Model 3 Production To Breakfast Time

We may look back on Q2 2018 as the make or break period for Tesla. If you are an investor, now is the time to call your broker, place your bets, and buckle up. It could be a bumpy ride.

As of this moment, no one is sure what the latest weekly production numbers for the Tesla Model 3 will be (the official announcement is expected shortly), but according to Elon Musk, his company was able to build more than 2000 of them in the last week of March. That’s not what he had promised 3 months ago, but it’s a big step up from the 1,190 per week the Bloomberg Model 3 tracker is showing as of April 3. Bear in mind the Bloomberg model is a rolling average that is not intended to reflect actual production in real time.

Musk sleeping bagElon sent an e-mail to all employees over the past weekend saying production would exceed 2,000 cars a day on the last day of the month, which also happens to be the last day of the first quarter. As reported by The Verge, that e-mail read in part, “It has been extremely difficult to pass the 2000 cars per week rate for Model 3, but we are finally there. If things go as planned today, we will comfortably exceed that number over a seven-day period!”

“Moreover, the whole Tesla production system is now on a firm foundation for that output, which means we should be able to exceed a combined Model S, X, and 3 production rate of 4000 vehicles per week and climbing rapidly. This is already double the pace of 2017! By the end of this year, I believe we will be producing vehicles at least four times faster than last year.”

We won’t know for a while whether those words will calm the fears of Tesla shareholders. Tesla stock fell nearly a third in March, due to a number of factors. A recall for broken power steering bolts and a fatal crash in California involving Autopilot didn’t help, but the biggest factor was a downgrade in the company’s bond rating. Analysts are concerned the company may not build enough Model 3 sedans to generate the cash flow it needs to keep moving forward with its ambitious goal to become a major global automaker.

Amidst all this turmoil, Musk has removed Doug Field, a transplant from Apple, from his duties as senior vice president in charge of production, a position he held while also being the head of engineering. The combined job titles were intended to insure that engineering considerations did not make the Model 3 too difficult to manufacture — something that happened repeatedly when the Model X was entering production.

Apparently, Musk is satisfied that the Model 3 is now ready for a full production ramp, so Field can return to his post as senior engineer. Musk himself will now head production.

The Q1 earnings call is still a month away. Between now and then, experts of every stripe will be debating whether or not the company is economically viable. Bulls will try to push the stock price higher. Bears will try to send it even lower. For the “In Musk We Trust” crowd, no amount of bad news can dampen their enthusiasm for Musk and Tesla. After all, how many people can shoot sports cars into space and teach rockets to fly backwards?

We may look back on Q2 2018 as the make or break period for Tesla. If you are an investor, now is the time to call your broker, place your bets, and buckle up. It could be a bumpy ride.

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