You may think that Tesla CEO Elon Musk is popping bottles at his factory in Freemont, California as the Tesla Model 3 finally hit its long-elusive production goal of 5,000 units per week. You wouldn't be wrong and Autoblog reports that after that goal was hit, one worker depicted the factory as a "mass celebration."
This celebration may seem well deserved as last month the company faced two fires, a whistleblower, and a lay-off that saw them axe nine percent of their workforce. In fact, they had to put a production line inside a tent on their campus to get the job done.
A new goal of 6,000 units per week has hastily been set, according to Reuters, but only time will only tell whether that goal is overly optimistic.
Tesla's financial future
Tesla believes that they will sustain and increase their weekly output and have based a prediction of positive cash flow and profit, in the third and fourth quarters of 2018, around this assumption. However, the analysts' perspective is far less rosy as they remain sceptical as to whether even Tesla's current production level is sustainable. Morgan Stanley analysts feel “there’s a big difference between making 5K Model 3 units for 1 week vs. sustaining 5K per week.”
These analysts call to question the company's long-term financial outlook and some believe that these doubts may just be what caused Tesla stock to fall despite the fact that they achieved their target for the quarter ending.
Efraim Levy an analyst for CFRA, one of the world's largest independent investment research firms, lowered their rating on Tesla stock to “sell” from “hold.”
Tesla's place in the automobile market
For many auto buyers, the jury is still out on electric cars with early slowpokes like the Toyota Prius, which posted a 12.9 second 0-60 MPH and 19 seconds 1/4 mile, leaving a bad taste in the mouths of some consumers.
However, the Tesla Model 3 has been backed by a fair amount of consumer enthusiasm, with Model 3 reservations totalling 450,000 at the end of the first quarter and approximately 420,000 at the end of the second quarter.
Tigress Financial Partners analyst Ivan Feinseth, says sees this as positive news for Tesla nothing that: "...the Model 3 takes them from a niche core producer to a mainstream automobile manufacturer.” This may mean that Elon Musk will escape being branded this century's equivalent of Preston Tucker who sought to bring an innovative car of the future to post-WWII America. Preston Tucker was portrayed by Jeff Bridges in the 1988 Francis Ford Coppola film "Tucker: The Man and His Dream."
