Despite facing manufacturing hell, Elon Musk, Tesla’s CEO, stated he is confident that the company will be able to meet and surmount challenges in the production of the Model 3 and that the company will be profitable in either the third or the fourth quarter of this year.
In a significant development that will have investors sighing with relief, Tesla’s CEO Elon Musk has disclosed Tesla’s production lines are demonstrating the ability to manufacture 3,500 vehicles per week and that building 5,000 Model 3s per week by the end of June was “quite likely”.
“This is the most excruciating hellish several months I’ve ever had… but I think we’re getting there,” said Musk on the sidelines of Tesla’s annual meeting of stockholders in Mountain View, California.
Shareholders have voted against a proposal to remove Musk as the company’s chairman and have re-elected three directors. Both challenges were some of the fiercest ones Musk has had to face to keep his grip on Tesla with many analysts saying the carmaker will need a fresh infusion of new cash to survive.
With the news reaching the market, Tesla’s share rose by 1%.
For Musk it was an emotional moment and he choked up as he came on the stage, taking up the microphone to talk about Tesla in front of investors.
“At Tesla we build our cars with love,” said Musk. “At a lot of other companies, they’re built by marketing or the finance department and there’s no soul. We’re not perfect but we pour our heart and soul into it and we really care.”
Tesla was facing manufacturing bottlenecks which have resulted in delivery delays, deferring much-needed revenues to existing issues in its production line as well as to projects that are in the pipeline.
Tesla has been engaging in “burst builds,” modes, temporary periods of intense production activity which is used to gauge the maximum number of cars it can potentially build over a longer periods of time.
Analysts at Barclays have however warned investors that brief “burst rates” of Model 3 production were not sustainable.
Musk also repeated on his assertion, albeit without providing a timeline, that Tesla does not plan to raise funds through either equity or debt, and he expects a positive net income and cash flow in the third and fourth quarters of 2018.
Musk also disclosed that talks are underway with the Chinese government for a factory in Shanghai.