Tesla's Model 3 promised to be the first mass-produced Electric Car that would be both reliable and affordable. This was a great selling point for the car and the orders started to pour in 2016. The car was meant to be on sale for as little as US$35,000 for new customers. As we approach the end of 2017, there appears to be an issue with the promises that were made.
As things currently stand there is no Tesla car on the market for the price that Tesla had promised. The company has recently updated their website in order to extend the waiting lists and times for customers.
So what has gone wrong?
The production process appears to be experiencing bottlenecks as production was wrapped up. This is one of the primary drivers for the delays in the production. The production line is not ready for the suddenly increased production demands for the new cars. Elon Musk and Tesla co-founder J.B. Straubel have been spending day and night on site in the Gigafactory as the team attempt to work through their production issues. The Gigafactory appears to be the main culprit in the delays as the reallocation of resources is delaying the completion of the autopilot component, the solar roof, the Tesla Network and other vital components.
What does this mean for the company?
As the company is having to further delay delivery of the vehicles to customers who have been waiting for nearly a year, it is not yet clear how it will impact sales.
However, at the moment customers still appear to be accepting the extra waiting times. Tesla is using a lot of cash as they attempt to fix these issues. This does appear to be a concern for the company and the company's shareholders as the stock price fell by nearly 9% in the wake of the latest news. The company is at risk of running out of cash, cash that the company needs to be able to fund other ongoing projects that are in the pipeline.
While the full financial impact of this latest delay has not been fully reflected yet, it is unlikely to be helped with the latest delay in other projects. It is likely that Tesla will struggle to raise new capital easily as they attempt to fix this setback. Consequently, confidence in the company will suffer. It is not clear yet whether the company will have enough cash capital available to keep investing into the company to fix this latest manufacturing delay. Musk will be under pressure to ensure that no more delays occur before the business starts to lose vital customers.
