Elon Musk

  • Tesla has no hope of hitting its goals for the Model 3 in 2018.
  • There’s no shame in rightsizing the car business to avoid further delays and setbacks.
  • CEO Elon Musk is going to have to make a brave call, and it could cost him a lot.

“Production hell,” as Elon Musk calls it, has reached a new level of blazing discomfort at Tesla. Last week, the company reported that it had fallen well short of its delivery goals for the Model 3, the $35,000 car that’s supposed to transform Tesla from a niche player to the dominant force in the new age of electrified automobiles.

Tesla also pushed back its production plans for the Model 3 by a full quarter — a 5,000-unit weekly run-rate now won’t arrive until the end of the second quarter of 2018.

On the bright side, Tesla set a record for 2017 deliveries, selling over 100,000 vehicles for the first time in its 14-year history. And there is a splash of cool water in production hell: fewer 2018 deliveries means that Tesla will tap out a $7,500 federal tax credit later than expected.

When Tesla revealed the Model 3 in early 2016 and almost immediately racked up hundreds of thousands of pre-orders for the car, I worried that the vehicle could do the company in. Demand was impressive — too impressive for an automaker that, with its previous two vehicles, had shown a pattern of extensive delays and quality-control problems. Tesla wasn’t yet ready to be a mass-market manufacturer; it had only just gotten its act together as a luxury brand.

The split between Tesla’s two businesses is now striking

Tesla Model S

Don’t get me wrong — the Model 3 looks brilliant, and the off-the-hook desire for the vehicle is completely understandable. But while sales of the Model S Read More Here