There’s more to this than meets the eye

Tesla has proven in the past that it’s capable of unorthodox measures to get certain work aspects done and apparently, it’s dipping into that well one more time after a Reuters report revealed that the electric car maker plans to shut down its production facility in California for a week beginning this month. The reason behind it? Prepare for production for the Model 3 sedan.

In some aspects, such a move isn’t that strange when you consider that other companies have done it in the past in one form or another. But Tesla is a different because it has little flexibility making “brief, planned” pauses in production for a period of time. But the automaker appears to have decided on the issue as it prepares to add capacity to its facility to accommodate the coming production of the Model 3.

A Tesla spokesman even confirmed to the news outlet about the plans, saying that “this will allow Tesla to begin Model 3 production later this year as planned and enable us to start the ramp towards 500,000 vehicles annually in 2018.”

Apparently, Tesla also plans to begin test-building the Model 3 later this month, which could be part of the reason why the facility is being shut down. The goal it seems is to gauge the capability of the production plant in Freemont, California to accommodate the massive spike in production volume that will inevitably happen once the Model 3 begins production. Remember, Tesla wasted little time shouting from the heavens last May that it had received more 370,000 refundable $1,000 deposits for the Model 3, highlighting the massive demand for the car that the company believes is its ticket in breaking into the mainstream auto scene.

The timetable set for the pilot production of the Model 3 also coincides with the company’s conference call with shareholders to report its fourth-quarter results. Apparently, Tesla wants to make a good impression in that conference call and positive news surrounding the upcoming production of the Model 3 could go a long way in appeasing its shareholders.

Continue after the jump to read the full story.

Read between the lines here

Now this is an interesting development, isn’t it? Tesla’s decision to shut down its production facility in Freemont, California can be couched in the manner that was presented in the Reuters story. After all, preparing for the production of the Tesla Model 3 is a valid reason to halt production in the plant.

But if you read between the lines, there is another reason why Tesla is taking this measure and it all has to do with its shareholders. See, it’s actually not a coincidence that Tesla is engaging in a conference call with shareholders to report its fourth quarter performance after undergoing this preparation of sorts. The Reuters piece even touched on it, quoting a source who said that there’s no better way to “stoke the fan base and Wall Street” than to wheel out pre-production models” ahead of the conference call.

And there it is.

I think that Tesla is taking this measure because it wants to put a lid on fears that the company may have bitten off more than it could chew with its boasts of producing 500,000 models annually, let alone begin production of the Model 3 in July 2017. A lot of analysts called those goals ambitious and they’re right, especially when you consider Tesla’s inglorious history of missed deadlines and production targets. If anything, Musk himself has indirectly backed off the July 2017 target to begin production, couching it with a disclaimer that it could miss the deadline if suppliers do not meet their own deadlines.

Don’t forget too that a separate news report last week indicated that design changes were being made to the Model 3. That in itself could cause production delays since some of these design changes could force suppliers to make changes of their own depending on what new requirements come out of it.

All these developments aren’t good for Tesla and its promises. At the very least, we can at least expect another delay in production, except that now, Tesla is making a preemptive strike in assuring its shareholders that the delays will be worth it in the long run once the Model 3 is set up the way the company wants it.

Give Tesla some credit for this. I think it’s being forthright when it said that it’s shutting down its California production facility because it wants to prepare for the start of the Model 3’s production. But I don’t think it’s the only reason. I think Tesla also wants to quell the growing concerns about the Model 3’s production timetable and the outright viability of the company’s ambitious sales targets.

As that unnamed source pointed out, what better way to do that than to roll out a pre-production Tesla Model 3.

Read our full review on the 2018 Tesla Model 3 here.

Source: Reuters

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