Tesla announced that it will halt the production of its California assembly plant for a week this month to ramp up production on its Model 3. The automobile company stated that this brief halt will enable it to beef up the capacity of its existing paint shop and prepare it for the Model 3 and various other maintenance activities, according to Reuters.
A brief pause to make preparations for the Model 3
“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,” said a Tesla spokesman.
He added that the impact of the halt will not be reflected significantly in first quarter production or delivery units, as the company has overworked in order to compensate for the pause.
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Tesla’s future largely depends on the Model 3, which is expected to come with a price tag of about $35,000 before government incentives. If the car becomes a hit, it could build Tesla’s image beyond that of a niche luxury player in the automotive sector. The Palo Alto-based manufacturer, whose market cap equals that of Nissan Motor, which posted a profit of $4.7 billion last year, has yet to post a profitable year since going public in 2010.
Will Tesla meet the deadline?
In another development, sources conveyed to Reuters that the EV firm will start test-building the Model 3 on Feb. 20. Last year, CEO Elon Musk told investors and over 370,000 customers who made an upfront payment to reserve a Model 3 that he is looking forward to starting production on it in July 2017.
At that time, many said the timeline was too ambitious and not easy to achieve, referring to Tesla’s history of missing aggressive production targets. There is no information on the number of vehicles that Tesla will be able to build in February, but it will be only a few units, mainly to test the assembly system and the quality of the vehicle parts, noted Reuters.
“What better way to stoke the fan base and Wall Street than to wheel out pre-production models” ahead of the earnings announcement, an individual familiar with Tesla’s plans told Reuters.
Tesla did not comment on its production schedule. However, last year, Musk stated that the company could fall short of the July 2017 start target if suppliers did not meet their deadlines.
On Wednesday, Tesla shares closed up 1.79% at $262.08. Year to date, the stock is up almost 23%, while in the last year, it is up more than 61%.