For most car fans, corporate earnings calls are the stuff boring articles are made of. But then there are the quarterly Tesla reports. Everyone from Wall Street investors to electric vehicle fans and CEO groupies usually gets something from these events. The same now applies to Model 3 reservation holders, who outnumber the automaker’s actual customers. This time around, the big takeaway from Tesla earnings report would be: get ready to wait (again).
Tesla said it produced 18,345 cars between April through June, 20% more than the first quarter, and delivered slightly over 14,000 of them, fewer than the 14,820 delivered the prior quarter. While Tesla said they had over 5,000 sold vehicles in transit to their owners, that meant about 3,000 people (based on the company’s delivery target) who ordered one were left waiting. Maybe it will only be an extra week or so, but nonetheless they and Tesla expected them sooner.
This type of delay has been normal for Tesla reservation holders, some of whom put down $40,000 in advance, as many did in the case of Model X. The Washington Post reported a story in January in which a Model X Signature reservation holder hadn’t got his SUV at the start of 2016 when his original delivery estimate was fall 2014.
Anyone who stood in line at Tesla stores or made a reservation online beginning March 31 knew they were making a move on a car that would likely arrive in 2018. Elon Musk had said the first deliveries would come in late 2017, so on Tesla time that would mean November or December. Unless you were at the front of the line and lived in California, your chances of seeing a Model 3 in your driveway before 2018 were slim. But then Tesla said it was accelerating its production schedule.
In May, the company’s goal of 500,000 annual deliveries was moved up to 2018 from a previous target of 2020. That meant the entire schedule would be pushed forward, with something near 100,000 Model 3 deliveries planned in 2017. At that moment, there were probably legions of Model 3 reservation holders who began having a new type of hope. Maybe the car would arrive next year after all?
This hope is hard to justify given the state of things in summer 2016. Tesla continues to struggle to deliver 15,000 cars per quarter. For the second half of the year, 50,000 more deliveries are targeted. Even if Tesla managed that and boosted production by 50% next year, only 120,000 cars would be rolling off the Fremont plant assembly line. If Tesla doubled its production in a single year, that would mean 160,000 cars would be delivered.
Are either of these goals possible even if everything works out perfectly between Tesla, its employees, its suppliers, and its customers? We’d like to believe so, but it seems closer to impossible. Doubling production in a year then tripling it the following year would be unprecedented in the history of the industry. So to Model 3 reservation holders, we say “as you were.” You probably were thinking 2018, originally. We suggest staying with that.