San Francisco, New York
The end of Elon Musk’s go-private-or-not saga with Tesla Inc. leaves investors back where the drama began: waiting to see if he can make more Model 3 sedans.
Signs of progress on this front may have softened the blow of the CEO electing to stay public after all. Production of the all-important Model 3 sedan may have steadily exceeded 5,000 a week for much of this month, according to Bloomberg’s tracker of Tesla-registered and owner-reported vehicle identification numbers.
Estimates from the experimental tool — which can fluctuate from week to week based on the company submitting new VINs in batches — suggests the carmaker may even have cleared the 6,000-a-week target set for late August.
Musk faces huge pressure to show progress with the Model 3 after his 17-day dalliance with buying out some shareholders drew regulatory scrutiny and investor lawsuits. Ramping up production to the levels the company has forecast is pivotal to generating the profit and cash flow that the CEO has projected for this quarter. It also would ease concerns about Musk’s leadership and Tesla’s precarious cash position.
“This was a big distraction over the past two weeks for all stakeholders, and now it’s time to make cars, deliver cars that make people happy, build a good product, and generate some cashflow,” Ben Kallo, an analyst at Robert W. Baird & Co., said Monday on Bloomberg Television.
Tesla has been consistently making between 4,000 to 6,000 Model 3s a week. That suggests the company could be on its way to meeting its third-quarter forecast for output of 50,000 to 55,000 units, or roughly 4,200 a week at the higher end of the guidance.
Musk, 47, pursued going private after months of bristling over how intensely the market and media were following Model 3 production. He wrote in a letter to shareholders at the beginning of the month saying that it was “fair to say that no production ramp of any other product has been as closely watched and debated”.