Earlier this week Tesla Motors announced that it would temporarily shut down its California factory in preparation for a test production run of Model 3 that begins on February 20.
No information was given about how long the production run would last or how many Model 3 units would roll out of the factory, but the move is expected to help Tesla eventually meet its production target of 500,000 cars per year by 2018.
A Tesla spokesperson told Reuters:
“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.”
“Later this year” very likely refers to July 2017 because CEO Elon Musk told investors last year that this is when his company intends to start full production on the Model 3.
The Tesla Model 3 is already the most sought-after electric vehicle in the world, with over 370,000 reservations booked as of last year.
Though critics at the time said that the timeline was “too ambitious”, it’s critical for Tesla Motors to meet this new test production schedule. Two days after the intended test run launch, Tesla will be announcing its fourth quarter 2016 earnings.
If successful, it could put some fire under Tesla’s stock price, as well as give investors, customers and critics a better view of when the Model 3 is likely to hit the roads.
The factory shut-down is to help Tesla add capacity to its paint shop and do general maintenance ahead of the test production run that begins February 20, 2017.
Model 3 is a crucial product for Tesla because it brings EVs into the mainstream auto market. So far, their efforts have yielded results, but they’ve been operating in the relatively small luxury segment. This is the first time Tesla will be testing the waters in the larger non-premium segment – a good test of whether or not the car will really sell in a sustainable way.
The test run will give Tesla the opportunity to make last-minute changes in design, which could effectively delay the actual production date because it may force additional expenditure and effort for suppliers, which they will naturally pass back to Tesla.
But the critics are still not convinced that the company will be able to get things ready for production in 2017. In January, Barclays analyst Brian Johnson said that “We assume 0 Model 3 deliveries in ’17”, while Adam Jonas from Morgan Stanley has said that they expect a “soft launch” to be delayed until late 2017.
So, now, the EV maker is not only racing against time, but also against predictions by well-known analysts from reputed firms.
If they can manage to pull through the test production run and not make any changes to design, they may well meet the July 2017 production start date as Musk claimed.
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