Tesla is planning to suspend the production of the Model 3 Sedan. This would be the second time in the last two months that production of Model 3 has been suspended temporarily.
In a statement, Tesla said it had planned downtime into its production plans at its car plant in Fremont, California “to improve automation and systematically address bottlenecks in order to increase production rates.”
Model 3 is considered to be the most important car for Tesla from a profitability point of view.
Considering the criticality of this project, the car has missed quite a few production goals so far. By the last week of March, Tesla made just a little over 2,000 models of the car. The car company is hoping to increase that to 5,000 cars by the end of the second quarter.
“I can’ t imagine that Tesla can reach an output of 5,000 cars per week until the end of June,” said Frank Schwope, an analyst with NORD/LB. “I expect that Tesla is going to fail their aims for this year, as they did so often.”
Model 3, the most affordable sedan from Tesla, is seen as crucial to the company’s future profitability, but has so far missed several production goals.
“While temporary suspensions to production, in order to improve manufacturing engineering/line rates, are not uncommon in the auto industry, particularly during a ramp-up, we believe that the news will once more be taken negatively by the market; providing more honey to the bears,” Evercore ISI analysts said.
The company informed the employees that the suspension will last for four to five days.
Tesla’s use of robots to assemble the Model 3 had led to more complexity and delays, which billionaire Chief Executive Elon Musk acknowledged on Friday in a tweet: “Excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated.”
Tesla’s experimentation in putting the Model 3 into bulk production has drawn scrutiny from investors. The starting price of this model is $35,000, making it Tesla’s most affordable and top-selling car. The company has been looking forward to a rapid increase in sales that will help them reduce the losses and pay off bonds and borrowings they will invested heavily in future vehicles.
Tesla shares fell as much as 2.9% in early trading on Tuesday.
