Is Model 3 production on par with Musk’s new goal of producing 6,000 cars a week by June?

For the past quarter, Tesla has very publicly grappled with a slew of struggles including — but certainly not limited to — manufacturing issues, another Autopilot-related fatality and a battle with a government agency. On Wednesday, all eyes will be on the electric vehicle manufacturer helmed by Elon Musk when it releases its first-quarter earnings.

There are a lot of questions Musk will have to answer, especially as the company has stumbled in its attempt to meet the ambitious manufacturing goals its CEO has set for the Model 3. There’s also the recent fatal Tesla crash, labor issues and Tesla’s inability to turn a profit.

Here’s some of what we’ll be paying attention to:

Production of the Model 3

The Model 3 is a significant barometer by which investors and the industry are measuring Tesla’s capability as an automaker. Can Tesla make the shift away from producing limited numbers of luxury cars and into being a mass-market manufacturer?

It’s not looking great.

When Musk revealed Tesla’s first-ever mass-market vehicle, the Model 3, he set an ambitious goal of producing 5,000 of the sedans a week by the end of 2017. The company then shifted that rate goal to 5,000 cars per week by the end of March 2018. In January, Musk lowered that goal to 2,500.

As of April, Tesla was producing 2,250 Model 3s a week, 500 short of that goal. In an email to staff, Musk said Model 3 production should be at 3,000 to 4,000 per week in May. Those struggles were also punctuated by a voluntary recall of 123,000 Model S vehicles. Analysts will be looking to get some updated production numbers.

Profit and losses

Musk thinks Tesla is ready to make some money.

“A fair criticism leveled at Tesla by outside critics is that you’re not a real company unless you generate a profit, meaning simply that revenue exceeds costs,” Musk wrote in an email to staff obtained by Jalopnik. “It didn’t make sense to do that until reaching economies of scale, but now we are there.”

The road to production has been both rocky and expensive for Tesla, which posted a $675 million loss on $2.7 billion in revenue for the fourth quarter of 2017. As Bloomberg points out, the company loses $6,500 every minute, and has seen its free cash flow in the negatives for five quarters straight. Some analysts believe that Tesla may have to raise more money as early as this year.

Now Musk says he wants to whittle down capital expenditures, and that starts with personally approving any expenditure above $1 million.

Another possible topic of discussion during Musk’s earnings call is the recent proposal to replace him as chairman of the board with an independent director. The proposal came from shareholder Jing Zhao, who owns 12 shares of Tesla common stock, arguing that it’s common practice to have the chairman of the board and the CEO be different people.

Shareholders are expected to vote on the proposal at the company’s annual meeting in June. Musk currently owns more than 33 million shares, or 20 percent of the company.

Wall Street is looking for a loss of $3.37 per share on revenue of $3.17 billion.

Autopilot

Tesla’s driver-assist technology, controversially called Autopilot, has been at the center of a number of recent issues.

The March 23 Tesla crash that led to the death of a driver occurred shortly after an Uber car in semi-autonomous mode took the life of a pedestrian. The National Transportation Safety Board, which is conducting an investigation into both cases, has yet to conclude whether the autonomous technology is at fault in either crash. Still, it’s enough to get consumers and the industry worried.

NTSB’s investigation into the Tesla crash has also led to a public spat between the agency and the automaker.

After Tesla confirmed that Autopilot was used during the accident, the NTSB revoked Tesla’s involvement in the investigation because Tesla released information before it was vetted by the agency.

That was bookended by the departure of Autopilor vice president Jim Keller, who left to join Intel. He is being replaced by Pete Bannon, who has been at the company for two years. But Keller, who handled Autopilot hardware, is just the most recent in a wave of exits on the Autopilot team. Before him, Chris Lattner — the creator of the Swift programming language — left after a few months because, as he tweeted, Tesla wasn’t the right fit. And before that, Sterling Anderson — now the co-founder of self-driving startup Aurora — left his role as director of Autopilot programs.

Production hell

When Musk unveiled the Model 3, he prepared his employees to go through what he referred to as “production hell” for at least six months. That was in July.

Just last month, however, Musk sent an email to staff asking employees to work around the clock to meet his new goal of 6,000 cars a week by June. As Musk wrote, the Tesla factory in Fremont, Calif., will produce Model 3s around the clock, 24 hours a day, seven days a week, and will add 400 people per week at both factories for several weeks.

Tesla’s relationship with some of its factory workers has been fraught. A new report from the Center for Investigative Reporting found that Tesla failed to report some of its serious injuries, and cited former employees who complained that Tesla put manufacturing above safety concerns. A Tesla spokesperson denied all of the claims in the report to CIR.

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Author:

Johana Bhuiyan

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