Hollis Johnson/Business Insider
- On Sunday, Tesla CEO Elon Musk said the company would start delivering the $35,000 base model of the Model 3 three-to-six months after hitting a production rate of 5,000 Model 3s per week.
- In early May, Tesla said it was aiming to produce 5,000 Model 3s per week "in about two months" during its first-quarter earnings report.
- If Tesla had shipped the base model immediately, it would "lose money & die," according to Musk.
On Sunday, Tesla CEO Elon Musk explained why the automaker hasn't made the $35,000 base model of its Model 3 sedan available yet and gave a timeline for when it will arrive.
After a Twitter user asked Musk when Model 3 customers would be able to order the base model, Musk wrote that Tesla will need three-to-six months after hitting a production rate of 5,000 Model 3 vehicles per week before starting to deliver the base model. If Tesla had shipped the base model immediately, it would "lose money & die," according to Musk.
"With production, 1st you need achieve target rate & then smooth out flow to achieve target cost," he wrote. "Shipping min cost Model 3 right away wd cause Tesla to lose money & die. Need 3 to 6 months after 5k/wk to ship $35k Tesla & live."
In early May, Tesla said it was aiming to produce 5,000 Model 3s per week "in about two months" in its first-quarter earnings report. The company had originally planned to produce 5,000 Model 3s per week by the end of 2017.
Musk also said Tesla would begin delivering the $78,000, dual-motor version of the Model 3 in July.
The Model 3 is Tesla's first mass-market vehicle and was designed to broaden the company's customer base beyond the luxury segment. But Tesla has struggled to ramp up production for the Model 3 since it was launched in July.
During the fourth quarter of 2017, Tesla made 2,425 Model 3 vehicles. The company made 9,766 Model 3s during the first quarter, but missed its goal of producing 2,500 per week by the end of the quarter, instead making 2,020 Model 3s during the quarter's final week.
In April, Musk said on Twitter that Tesla used too much automation in the Model 3 production process.
"Yes, excessive automation at Tesla was a mistake. To be precise, my mistake. Humans are underrated," he wrote in response to a Wall Street Journal reporter.
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