One of the key facets behind electric-car maker Tesla‘s (NASDAQ:TSLA) soaring stock price in recent months is increasing confidence from investors in the company’s ability to ramp-up vehicle production from an annualized run rate of about 100,000 units today to management’s target for as many as 500,000 units next year. But Tesla will need to successfully launch its higher-volume, lower-cost Model 3 first before it can take its production to the next level.
On this note, Tesla is back with some more news on its crucial Model 3 launch. The final unveiling of the Model 3 will be in July, Tesla CEO Elon Musk said on Twitter Thursday.
What to expect from the Model 3 unveiling
Based on how Tesla went about the final unveiling of its Model X SUV in late 2015, a final unveiling of the Model 3 could include the first deliveries of the vehicle to customers, along with details on the big unknown facts about the vehicle, such as battery capacity options, official EPA-rated range on a single charge, and the vehicle’s finalized design — inside and out.
Up until Thursday, it wasn’t clear when Tesla would be holding an event for the final unveiling of its Model 3. While Tesla said it would begin Model 3 production in July, Musk suggested the company might continue to keep details about the $35,000 vehicle secret as long as possible, particularly since the first deliveries were slated to go to employees, anyway.
“I think it’s important for us to have a good feedback … on the product that we’re making and if there are any issues or valuable things that need to be addressed that we can address those before customers experience them,” Musk explained in Tesla’s fourth-quarter earnings call.
Musk went on to say that the unveiling could be as soon as a few months from its Feb. 22 earnings call or “as far as July itself.” Apparently, Musk opted to keep as many secrets about Model 3 as possible for as long as possible.
As far as what exactly the final unveiling might reveal about Model 3 is still a mystery. Musk stated in the company’s fourth-quarter earnings call that the final version will be “pretty close” to the prototype unveiled last year, “but with polish and refinement and a few more details that are added.”
In addition, Musk said: “It will be better than what was unveiled. And I guess in some ways, it will be a lot better.” Could Musk be any more vague?
The main details investors know today is that it will have at least 215 miles of range on a single charge, be slightly smaller than the Model S, include Autopilot hardware as standard — but customers will have to pay to activate “Enhance Autopilot” — and have a starting price at about half of the Model S’ starting price.
But don’t expect volume Model 3 deliveries yet
Despite a target month for the final unveiling of Model 3, investors should keep their expectations in check. After the stock’s 51% rise in the past six months, investors are already pricing in not only a successful Model 3 launch, but a well-executed production ramp to unit-volume levels that Tesla has never achieved.
In addition, while production of Model 3 and a final unveiling of the vehicle are coming in July, it’s going to take time for the company to begin producing the vehicle in meaningful volumes. Tesla isn’t aiming to achieve “volume production” until September, the company said in its fourth-quarter shareholder letter.
While it’s not clear what volume production in September would look like, Tesla expects to exit 2017 producing Model 3 at about 5,000 units a week. And in 2018, Tesla wants to hit a production rate of about 10,000 vehicles per week sometime during the year.
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