Just 260 Tesla Model 3s built in three months, volume production delayed: Q3 results and call

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2017 Tesla Model 3 "first production" car, in photo tweeted by Elon Musk on July 9, 2017

2017 Tesla Model 3 "first production" car, in photo tweeted by Elon Musk on July 9, 2017

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Only one topic really mattered in the Tesla third-quarter financial results call for analysts held Wednesday afternoon: Model 3.

In light of far lower September deliveries than promised as late as July by Tesla CEO Elon Musk, all interest focused on the more-affordable, higher-volume electric car that's meant to catapult Tesla to selling half a million cars a year.

The news for October deliveries was, to put it bluntly, not good.

DON'T MISS: Parts order for Tesla Model 3 cut by 40 percent starting in December: report

Model 3 deliveries had kicked off in late July with a highly touted ceremony in which 30 carefully chosen buyers took delivery of their cars.

But during the three months that followed, ending on October 31, the company has managed to build only 260 of the cars.

The financial data show the "production hell" mentioned many times by Musk is real, long-lasting, and proving both very challenging and extremely expensive.

 

2017 Tesla Model 3 and 2011 Nissan Leaf, Half Moon Bay, California, Aug 2017 [photo: Scott Forrest]

2017 Tesla Model 3 and 2011 Nissan Leaf, Half Moon Bay, California, Aug 2017 [photo: Scott Forrest]

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Tesla lost $619 million during the third quarter, from July through September, a record high quarterly loss and a contrast to the $22 million profit the company delivered in the comparable quarter of 2016.

(That profitable quarter was largely discounted by analysts, who noted that it could be attributed to sales of zero-emission credits and delaying payments to vendors, among other mechanisms.)

In its quarterly letter to shareholders, Tesla attributed the Model 3 production lag to a collection of problems in getting the line up and running at its assembly plant in Fremont, California.

READ THIS: Tesla: Model 3 production problems prompt electric Semi delay

Those included welding processes and final assembly tasks that moved more slowly than other parts of the manufacturing system.

The company will add robots at those "choke points," Musk said on the conference call. (The full transcript of Wednesday's call makes for interesting reading.)

Tesla also said Model 3 production suffered from a shortage of battery packs for the car from its massive Gigafactory outside Reno, Nevada.

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'Revenge of the Electric Car' premiere: Elon Musk arrives in a Tesla Roadster

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The Model 3 uses a new design for the modules inside the pack that are composed of the multiple individual 2170 lithium-ion cells produced by its partner Panasonic.

As a result of these production challenges, Musk acknowledged that Tesla would not reach production of 5,000 electric cars a week by December 31, as he had projected earlier this year that it would.

Given numerous media reports on the Model 3 problems, that conclusion did not come as a great surprise.

CHECK OUT: Manufacturing expert says Tesla Model 3 plan to skip beta testing is risky

The company now expects to reach that production level sometime during the first half of 2018.

Musk mentioned that Tesla has now delivered more than 250,000 electric cars over the 10 years it's been selling them, starting in 2008 with the low-volume Roadster.

The bulk of those cars have been the Model S hatchback sedan launched in mid-2012, with the Model X crossover utility vehicle coming in second place.

2018 Tesla Model 3

2018 Tesla Model 3

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As always, Tesla declined to break down its deliveries by country, so it's unclear how much of its market lies in the U.S. compared to its ambitions of selling electric cars worldwide.

The company also said it expects to deliver 100,000 or more cars during 2017 as a whole, which would be a new high.

It delivered 76,000 electric cars during 2016.

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