Tesla Sticks To Its Promise To Begin Production Of The Tesla Model 3 In July Despite Big Loss In Q1

May 05, 2017 03:00 PM EDT | Anthony Hunter

When Tesla announced a loss in the first quarter of this year, they confirmed that the Tesla Model 3 sedan is still set to start production in July. The company's very first sedan will go to the employees of SpaceX and Tesla.

While the company is preparing to start the production of the new sedan soon, they also have been running through cash quickly in the past two quarters. It was the biggest cash burns in the company's history. Tesla already lost $1.33 a share, which is worse than expected.

Tesla provided some updates on the Model 3 sedan by releasing its Q1 letter to shareholders on Thursday. The letter stated, "Vehicle production in Q1 increased by 64% compared to a year ago, which enabled us to set new quarterly records of 25,051 deliveries and $2.7 billion in GAAP revenue." "Simultaneously, preparations at our production facilities are on track to support the ramp of Model 3 production to 5,000 vehicles per week at some point in 2017, and to 10,000 vehicles per week at some point in 2018." "Based on our current order and production rates, our first half outlook remains unchanged at 47,000 to 50,000 deliveries, which represents 61% to 71% annual vehicle delivery growth."

Many analysts doubt the company's ability to achieve its production timeline for the new sedan, given Tesla's history. In fact, both the Model X and Model S had suffered delays, so it would be impressive knowing that Tesla is sticking to their promise this time around. The company also admitted that due to lack of internal capability to make parts in-house had slowed the whole production process of the Model X.

So to make sure that the Tesla Model 3 sedan will not suffer the same fate as with the Model X and S, Tesla ended the production at its California assembly plant to make way for the new sedan. New prototypes were built to make sure the quality of the car's parts and sort out any last minute issues with the assembly system. The new sedan will slot into the line-up as Tesla's entry-level sedan and price will start around $35,000.


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