On Monday, Tesla had announced it had produced 53,339 vehicles during the second quarter, up by 55% from the first quarter. Tesla had managed to achieve an elusive production rate of 5,000 vehicles per week in the last quarter. Elon Musk hailed that Tesla now expects to increase production to 6,000 Model 3 vehicles per week by late August.
This news had made Tesla’s shares rise as much as 6.4% to $367.78 in early trading but sank after the Wall Street got skeptical about its operation model. Many Wall Street analysts feel that this production rate is not financially and operationally sustainable. Some feel that this production rate is still insufficient for Tesla to make profits.
Tesla which hasn’t been making any profit from the time of its launch has been able to balance its cash-flows with the money pouring from investors and banks. In the past years Tesla has been spending a lot on its R&D and focusing on new tech which was much greater than its money made from selling cars. But this strategy was appreciated by its investors, as they had predicted that Tesla would start seeing profits by 2020, that’s only possible when it reaches a sustainable production rate.
By running around the clock and pulling workers from other projects into the production of model 3 to achieve this production rate isn’t an everlasting-sustainable production model.
Back in 2008, Tesla miraculously survived the world economic crisis, but luck might not be able to save Tesla again if its investors (only thing that’s stopping Tesla from going bankrupt) backs off.