May 16, 2018 - Energy & Environment

Tesla's split-screen day for Model 3 production

Photo: Salwan Georges/The Washington Post via Getty Images

The last 24 hours have brought good and bad news for Tesla, which is grappling with the troubled production ramp-up of the Model 3 sedan and the exit of some top executives.

Why it matters: Investors and analysts are watching carefully to see whether Musk can make good on his pledge to finally reach a production rate of 5,000 Model 3s per week by mid-year.

Losing confidence: Per CNBC, a research note by Morgan Stanley analyst and longtime Tesla optimist Adam Jonas signaled his concern that the company's Model 3 woes could linger and slashed his stock price forecast:

"It is our view that the challenges in ramping up Model 3 production reflect fundamental issues of vehicle design, manufacturing process, and automation levels that can weigh against the profitability of the vehicle."

But, but, but: An internal company email Tuesday from CEO Elon Musk, obtained by the tech site Electrek, states: “It is looking quite likely that we will exceed 500 vehicles per day across all Model 3 production zones this week.”

  • The email implies they're on the cusp of already getting to over 3,500 per week, well above the 2,270 level the company said it reached in April.

The big picture: Tesla's fate is tethered to the success of Model 3. It's a vehicle imagined as a mass-market EV that can compete directly with popular mid-priced gasoline-powered sedans manufactured by the world's biggest automakers.

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