Tesla seems to have settled into a sustainable Model 3 production rate of at least 5,000 units per week. In its recent shareholder letter, the company reported that it had eliminated some bottlenecks, and now hopes to produce over 50,000 Model 3s during the current quarter.
Tesla’s friends were happy to hear that the frenzied rush to ramp up to 5,000 is over, and that the emphasis will now be on quality, not quantity, with a slow but steady increase to 10,000 units per week.
“No production target is more important than sustained quality, which is why every vehicle we produce goes through a thorough set of measurements and tests before it reaches the customer,” reads the letter. “Model 3 quality continues to improve every month and is already on par with Model S and X.”
The company has invited financial analysts to visit its Fremont factory, and at least one of these has corroborated that production is firmly on track.
“Tesla seems well on the way to achieving a steady weekly production rate of 5,000 to 6,000 units per week.” wrote Evercore ISI analyst George Galliers in a note to clients. “We are incrementally positive on Tesla following our visit. We have confidence in their production. We did not see anything to suggest that Model 3 cannot reach 6k units per week, and 7k to 8k with very little incremental capital expenditure.”
(Despite his positive comments on the production ramp, Galliers maintains a somewhat pessimistic TSLA price target of $301.)
Tesla plans to increase the production rate without having to add new Model 3 production lines, which should allow a welcome reduction in ongoing capital expenditures.