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20th of February 2018

Automotive



Tesla Model 3 targets hinge on battery assembly system stuck in Germany

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Tesla Model 3 production is currently the most closely watched aspect of Tesla's business, since many industry observers (and Elon Musk himself) consider the production of the electric sedan a make-or-break moment for the company. That make-or-break moment is currently pushed out to the end of the second quarter of 2018; after two delays Tesla expects to hit the 5,000 per week pace by the end of June. Originally, Tesla expected to reach this production pace by December 2017, later being forced to push it back to the end of the first quarter of 2018. The automaker was forced to push that target back again, due to production "bottlenecks" pinned on battery assembly and steel welding issues, and in recent weeks most of the focus of industry observers has been on the hand-assembly of battery packs for the sedan, currently considered to be the greatest hurdle in Model 3 production.

But Tesla still expects to hit 2,500 cars per week by the end of March, a target that is now in doubt, as well.

Bloomberg reports that Tesla has a new automated system for battery module production, an industrial assembly line that could greatly speed up production. But there is one small problem: This automated system for battery module production is in Germany, and Tesla's battery assembly Gigafactory is in Nevada.

First Drive Tesla Model 3Tesla Model 3

"That's got to be disassembled, brought over to the Gigafactory, and re-assembled and then brought into operation at the Gigafactory," Musk told Bloomberg reporters in a conference call last week. "It's not a question of whether it works or not. It's just a question of disassembly, transport and reassembly."

As the middle of February and Q1 nears, Tesla needs this new battery assembly system to be shipped from halfway across the world and up and running with no issues. Not only does the Q1 target depend on this assembly system being operational in Nevada, but the Q2 target of 5,000 cars per week likely hinges on Tesla being able to quickly integrate this assembly system, given no other production issues.

Tesla Model 3 teardown

Tesla has wisely deferred making predictions about the 10,000-cars-per-week target until it reaches the 5,000-cars-per-week target, but one good piece of news is that it has managed to slow down capital expenditures in the fourth quarter of 2017; Tesla's negative cash flow in Q4 of 2017 ended up at just $277 million after two successive quarters amounting to $1 billion each. Bloomberg notes that this figure was the lowest in more than a year, buying Tesla some time and money in 2018 without another round of cash raising efforts.

Despite the delays, this month's successful launch of a Tesla Roadster into space aboard the Falcon Heavy rocket system seemed to bolster the company's positive PR standing.

"If we can send a Roadster to the asteroid belt, we can probably solve Model 3 production," Musk said in a conference call with analysts, according to Bloomberg.

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