Tesla is taking its time on the manufacturing side to get the Model 3 right

Tesla is taking its time on the manufacturing side to get the Model 3 right

Tesla has released third quarter sales and production numbers which show a low number on Model 3 output, although it is early in the schedule for the new high volume model.

Tesla said in a statement that just 260 Model 3s were made in the third quarter and it said that Model 3 production was "less than anticipated due to production bottlenecks". It also said that while the "vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected".

However, it said that "there are no fundamental issues with the Model 3 production or supply chain" and that Tesla understands what needs to be fixed and is "confident of addressing the manufacturing bottleneck issues in the near-term".

Analysts caution that it is still early days in the production schedule for the new Model 3 and that Tesla will be working hard to ensure that everything is working correctly before volume is ramped up. The company experienced manufacturing process and supply issues on the Model X that meant it undershot volume targets initially.

The current quarter is likely to come under heavy scrutiny for evidence that Tesla has dealt with manufacturing/supply chain issues and is rapidly raising output of the Model 3.

Overall, Tesla reported strong delivery and output numbers on its other models in Q3. In the third quarter, Tesla delivered 26,150 vehicles, of which 14,065 were Model S, 11,865 were Model X, and 220 were Model 3. The quarter was a record for Model S and Model X deliveries, representing a 4.5% increase over Q3 2016, its previous best quarter, and a 17.7% increase over Q2 2017.

Tesla also raised its forecast for second half Model S and X deliveries. Previously it said the two model lines would likely exceed first half deliveries of 47,077, but said it now expects to exceed that by 'several thousand vehicles'. In total, Tesla expects to deliver about 100,000 Model S and X vehicles in 2017, which would be a 31% increase over 2016.

 In addition to Q3 deliveries, about 4,820 Model S and X vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q4 2017, Tesla said.

Tesla Q3 production totalled 25,336 vehicles, with 260 of them being Model 3.