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Tesla Could Have Trouble Meeting Its Looming Production Targets

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After posting a profitable fall quarter, Tesla returned to spending more than it made. However, its fourth quarter losses, announced on Wednesday, were substantially less than originally assumed by analysts. The electric carmaker’s stock price continued to climb during the final three months of 2016, despite losing $448 million from its operations.

Tesla has been throwing a lot of money at projects and acquisitions. It recently purchased SolarCity and Grohmann Engineering, so going into the red was to be expected. However, the dark cloud looming in the distance isn’t related to capital — it’s about production.

In 2016, the automaker anticipated building roughly 90,000 vehicles but only managed to birth 75,000 into existence. In its most-recent quarterly letter to investors, Tesla says it should begin limited production on the Model 3 in July before ramping up to 5,000 weekly units during 2017’s final quarter and reaching 10,000 vehicles per week “sometime” in 2018.

It also has to meet continued demand for its current models. Tesla has received 49 percent more global orders for its vehicles in the final quarter of 2016 than it did for the same period in 2015. “We expect to deliver 47,000 to 50,000 Model S and Model X vehicles combined in the first half of 2017, representing vehicle delivery growth of 61% to 71% compared with the same period last year,” read the letter to investors.

That’s a goal of roughly 110,000 cars, which includes the first round of Model 3s it hopes to roll out this summer and the S/X Models it needs for the second half of this year. That means Tesla effectively has to double its production volume as soon as possible, and then do it all again to even approach CEO Elon Musk’s earlier production promise of 500,000 vehicles per year by 2018.

While that timeline seems unlikely, the company does seem committed to hustling to meet demand and is finalizing the locations for three additional Gigafactories. In its shareholder letter, Tesla confirmed that it was expanding its massive battery-producing complex in Nevada and “expects to finalize locations for Gigafactories 3, 4, and possibly 5.â€�

In case you were wondering, Gigafactory 2 is the Tesla solar plant in New York State. The company anticipates production of its solar roof to kick off in the latter half of this year.

Meanwhile, Musk is continuing his fight against the growing unionization efforts at the company’s Californian production facility. He suggested that unionizing could impact Tesla’s cost structure and offer no benefit to workers — people he now needs more than ever to meet these lofty production targets.

[Image: Tesla Motors]

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