Electric Car

Even Model 3 Suppliers Don’t Think Tesla Can Outsell Mercedes By 2018

Tesla is trying to pull off the equivalent of a lunar landing with a short timeline.

Have you ever crammed too many plans and errands into a single day and spent the whole time rushing back and forth praying that a small holdup in traffic or an unforeseen incidental doesn’t throw a wrench in your arrangements? Then you know exactly how Tesla must feel after it cut the timeline in which it will deliver the Model 3 sedan by two years. Now the company is scrambling to go from producing 50,00 cars a year to 500,000 cars per year, about the same as Mercedes’ annual output, by 2018.

To pull off this tremendous feat, Elon Musk has been instilling strict policies with Tesla suppliers including a no compromises approach. If a supplier cannot meet Musk’s deadlines, he’ll simply drop them and look elsewhere. However, this may still not be enough. The assembly line for the Model 3 still needs to be built and that can only take place after the car’s design and engineering is complete. Even though the Model 3 will feature fewer parts than a traditional gas-powered car (around 6,000-7,000), a delay for even a single part can set the company back by months. This already happened once with the heavily delayed Model X when the hydraulic lifters for the Falcon Wing doors proved to be unreliable.

Additionally, Tesla is relying on the Gigafactory to produce the batteries for the Model 3, and given that the factory is still under construction, any delays there will mean that Model 3 customers will have more time to migrate to other electric options. With all of these variables at play, many of Tesla’s own suppliers as well as industry forecasters are questioning whether or not the baby manufacturer has what it takes to pull off such an ambitious timeline for the leap in production. Analyst Jeff Schuster thinks difficulties in battery production make the goal "implausible." In order to make things go more smoothly, Tesla has recently decided to raise nearly $2 billion, but given its demands, the issue may be the limits of technological innovation rather than the money.

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