Elon Musk takes the wheel at Tesla to try and solve Model 3 production issues

It’s no secret that the Tesla Model 3 car has had its share of issues in production terms. The vehicle was touted as the first affordable model for the mass-market, with a lower price tag compared to Tesla’s of the past which would encourage consumers to make the move to electric cars, but deliveries of it to customers have been delayed multiple times, a fact which has repeatedly frustrated investors over the last year. Some were worried that the side projects of Tesla CEO Elon Musk (the Boring Company and SpaceX) were taking up far too much of his attention, contributing to the bottleneck in deliveries.

This may now change however. The enigmatic Musk is taking over responsibility for Model 3 production, according to sources, pushing aside his Senior VP of Engineering Doug Field. The news helped the stock to rally by over 4% on April 3rd, but may not come as a big relief to investors overall, given that Tesla shares have just seen their worst month in 7 years, down over -24%!

The biggest losses came after news broke that a Tesla driver had died using a Tesla vehicle’s autopilot mode on a California highway. Tesla say the driver received visual and audible warnings but ignored them, so it wasn’t the fault of the autopilot system but human error which caused his death.

Despite investor concerns about production bottlenecks and vehicle safety, clearly Musk has kept his trademark humour intact. On April 1st the CEO Tweeted that Tesla was bankrupt despite intense efforts to raise money including a mass sale of Easter eggs.

Though the Tweet was sent in jest, it was not a million miles from the truth. Nothing was funny about Tesla’s financial statement for Q4 2017. The company lost $1.96 billion that year, up from a $675 million loss in 2016. To boot, the company already owes investors over half a billion Dollars in interests paid annually on debt. Total liabilities for Tesla stand at $24 billion, or 84% of its assets.

There’s no guarantee that with Musk on board, the Model 3 production issues can be resolved completely, and while the massive dip in the share price might have prompted a tasty buying opportunity for investors, caution should be exercised!

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Tesla Stock Turns Bearish as Model 3 Production Disappoints Investors

Shares in electric auto-maker Tesla slipped Thursday (4/1/2018) on American stock markets, after the company announced production targets of Tesla’s highly sought after Model 3 cars had been pushed back yet again!

In the latest disappointing news for Tesla investors, the company revealed they delivered 29,870 vehicles in Q4 2017, with only 1,550 of those being Model 3 cars. These numbers fell short of forecasts, while it pushed back production targets for the Model 3 as well. This puts the Model 3 at under 2,000 deliveries for its first six months, while the Chevy Bolt just announced its best month ever at more than 3,000 units delivered. A damning comparison.

In 2017 the company said it planned to reach a production rate of 5,000 Model 3 cars per week by the end of the year, but later revised back this target to the end of Q1 2018.

Now however it says it doesn’t expect to reach this target until Q2 this year (representing yet another delay). It said it had made “major progress” toward addressing production bottlenecks, but these words will ring hollow for investors who are growing increasingly frustrated.

Tesla figurehead Elon Musk said in October that the company had been “deep in production hell” making the Model 3. The car is its first attempt to create an appealing electric vehicle for the mass market and not just niche enthusiasts.

Some investors believe the issues in the production chain could be more easily resolved if Musk spent more time on Tesla instead of his other ventures (The Boring Company and SpaceX).

Here’s a 1 month chart for Tesla’s stock. It was a poor December for shareholders.

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With all of this being said, I find Tesla to be a fascinating company and a stock to watch for the long term.

Setbacks in production, though frustrating, are not unusual for a business which is so focused on revolutionizing the auto-sector and the way humanity will travel in the future. I think investors understand that too.

Tesla’s tentacles keep spreading further across the auto-industry. Elon Musk announced the Tesla ‘Semi’ truck in November 2017, a fully electric alternative to traditional trucks, which seems as if it will genuinely be able to compete in the space with its regular diesel/petrol counterparts.

Then there is his side-line projects like The Boring Company, which aims to relieve congestion on American roads by creating huge underground tunnels for traffic to flow through, as well as his ambition to give people the chance to travel around the world at rapid speeds via spacecraft (London to New York in 29 minutes, anyone?)

Overall, those who are shorting Tesla stock at the first sign of issues (like this production problem) are probably not the sort of people who should have bought the stock in the first place. If you believe in Elon Musk and his aspirations, then this is a long-term buy and hold and you shouldn’t jump ship when hiccups occur along the way. You can see that by looking at just how far Tesla’s vehicles have already come since its inception in 2003. The stock price has also ballooned by nearly $300 in the past 5 years despite a chorus of criticism from naysayers who doubted its ability to enact change.