What happens when a start-up automaker exceeds the production rate goal they've published over and over? Tesla Motors has promised that in 2013 they'd produce 20,000 Tesla Model S's, or about 400 cars a week. However, in their latest Inside Tesla blog post George Blankenship claimed the factory had reached a 500 car/week production rate, and was looking to push the rate even higher.
What Blankenship wrote is: "During the past three weeks we have averaged more than 500 Model S deliveries per week, and it looks like we’ll be setting another record this week."
That production rate equates to about 25,000 Model S's per year, which is quite a bit more than the 20,000 cars per year production goal.
However a careful reading of Blankenship's statement shows that the delivery rate is 500 cars per week, which may not mean they've achieved that as the production rate. It may mean there was a backlog of deliveries which is being sorted out, perhaps by hiring more delivery specialists.
Unlike other automakers, Tesla Motors does not publish monthly production or sales numbers. These numbers are published (summarized really) in the quarterly SEC filings, instead, making those filings critical documents for predicting Tesla's chance of making it to profitability. In the latest filing for Fiscal Year 2012, Tesla management promised they'd reach profitability this quarter, thanks to the increased sales rate.
Several times since the June 2012 Shareholders meeting, Tesla Management claimed they needed sales of only 8000-10,000 Model S's per year to break even ("cash flow positive"). Now that the production is at, or above, 20,000 per year the promise of being profitable in the first quarter of 2013 (ending March 31) seems plausible. What we'll be watching for is a hint of whether Tesla will be able to maintain the sales rate over the long term. In other words are there more than 20,000 Model S customers in the world?
Curiously, a Facebook posting by Tesla Motors, posted the same day (March 21 2013), said "We've ramped up! The Tesla factory is now producing 400 Model S a week!" The Fiscal Year 2012 SEC filing said that production rate had been achieved in December making it a real puzzle why they'd post a Facebook message three months later to celebrate reaching that production level. If Tesla did not actually reach that production level in December 2012, but only just now did so, their actual sales will be much lower than expected. Lower than expected sales means lower than expected revenue, endangering the promise of reaching profitability this quarter. If they reached that production level then failed to maintain that production level, does that mean trouble in Tesla's manufacturing plant or supply chain?
Additionally Blankenship disclosed that as of March 21, 2013, the 3000th Model S has been registered in California. This number is important not just to demonstrate how eagerly Californians are buying electric cars, but because Tesla earns ZEV credits on every electric car they sell. The company sells these credits to other car companies, so that those companies can continue to sell cars in California even without selling their own ZEV's in that state.
The Inside Tesla blog post also had a few other little tidbits: They're now conducting test drives in Europe and Asia. In total Model S owners have driven 12 million miles since the first Model S delivery last summer. They're promising some progress in building out the Supercharger network, whose deployment is not progressing as rapidly as expected when launched last fall. Specific areas mentioned are Pacific Northwest, Texas, Illinois, and Florida with additional coverage in the Northeast and California.