It probably has nothing to do with technical issues but with Tesla's business model.
If you collect money first, deliver product second, and pay suppliers third, you need to run the business a certain way.
When sales are weak, you need that cash to pay your suppliers from the previous deliveries.
Right now, TSLA does not enough money to pay their suppliers.
So... you need to reduce parts orders for new deliveries, and push back deliveries, until you collect more money from sales.
Tesla's model works great if you always increase sales each month. But it works rough if sales growth is slow, it works badly if sales level out, and becomes a Greek tragedy if sales are reduced.
Tesla has already pushed back deliveries of the MS/X. They have reduced their workforce, and like I had predicted, lowered parts orders and borrowed more money. There are more often than not penalties for reducing order quantities, and can downgrade your credit, especially with the company in question. It is something you try to avoid, but the alternative is often 'late pay' on the parts orders, which can really screw you. The amount of money you save by reducing an order is not seen immediately unless you've been downgraded to COD terms. So Tesla is scrambling to stop something very bad from happening in the 4th quarter.
There is a real possibility we are watching the beginning of the end of Tesla Motors. Maybe a 10% chance at this point.
Assuming this is true, and my guess is that it is, it's actually fairly solid data as to what we can expect production of the Model 3 to look like. Not sure how many cars 10,000 parts per week translates into. Assuming it's even 3:1, if Tesla can sell this many units the Model 3 will be a huge sales success.
Firstly, note that the report is in Chinese and Google Translate is needed for English language readers to get a better idea of the story. The report seems to indicate, Tesla Model 3 supplier, Hota, which makes a gearing related part for Model 3, is claiming several things:
Hota was originally ordered to make 5000 parts per week. They are currently making and planning to make 5k parts per week for October and November.
Per contract, Tesla gave them a 2-month notification to reduce order rate (part of the reason for the 2 month lead time could be the shipping time from Taiwan to the US).
Other Taiwanese vendors are also affected and are in a similar situation.
The article also speculates about production problems with Model 3 seats.
Would anyone care to speculate how many Model 3s will come off the line this month??
The November 1st 3Q report should be quite interesting...
First official slip on the Model 3
Tesla now says 5,000 Model 3’s per week late in Q1 2018.
The company also has eliminated guidance for hitting 10,000 units per week sometime in 2018, now just talking about implementing that capacity after it hits the 5,000 per week rate.
Q3 net loss of $619 million GAAP, or $2.92 per share non-GAAP.
Cash burn tops $1.4 billion in quarter.
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