Are we witnessing the birth of an auto giant?
In recent days Tesla stocks, which were once surging due to the bewildering number of Model 3 preorders, have dropped and the reason might surprise you. Apparently, investors are worried that Tesla has too much on its hands to handle, making this one of the rare occurrences where a company's stock drops because people like its product too much. However Elon Musk wanted to quell those doubts and did so by making a huge announcement during a conference call with analysts.
He told them that by 2018, Tesla would build 500,000 vehicles and could crank out nearly a million per year by 2020. By contrast, Mercedes sold 1.7 million cars in 2014. In the past, Tesla has had trouble meeting deadlines, which is probably fueling the current investor concerns alongside the monumental task of building so many cars. Now that Tesla has 400,000 preorders on its hands, it would have to to ramp up production drastically in order to keep its promise. During the conference call, Musk said that he is hell bent on being the best manufacturer out there, but he never outlined how the company would meet such a target. All we know is that Tesla investors have gotten a letter saying that the process would likely require more capital.
For now, there are rumors going around that Musk has a sleeping bag and a desk on the floor of his Freemont, California, factory to keep an eye on his workers and make sure the job is done perfectly. This practice has led to what Musk claims is improved build quality on the Model X. Lastly, Musk claimed during the call that he expects current demand to multiply once people see what the Model 3 is capable of and test drive it, so factories in Europe and elsewhere in the states may be necessary. If Tesla's numbers really do grow as fast as Musk predicts, then we may be witness to the birth of an auto giant in the next few years. Hopefully we'll know just how the hell Tesla will pull this off by the time the first Model 3s roll out.