In classic Elon Musk fashion, the billionaire and Tesla (ticker: TSLA) CEO made waves, letting slip some news about the company’s much-hyped Tesla Model 3: The first one will come off the assembly line this Friday, July 7.
“Model 3 passed all regulatory requirements for production two weeks ahead of schedule. Expecting to complete SN1 on Friday,” Musk tweeted, using jargon to refer to “serial number 1,” the first Model 3 to be produced.
[Read: Why the Auto Industry Is in Trouble (F, GM, TM).]
The tweet caused TSLA stock to post a small rally in the early trading hours on Monday, with shares rising over 2.5 percent to start the day.
“This is big news, and the production is sooner than I had anticipated,” says Michael Kramer, a portfolio manager on Covestor and founder of Mott Capital Management in Garden City, New York.
Shareholders are eagerly digesting every new detail about the highly anticipated Model 3, which will be the innovative electric car company’s first mass-produced, affordable vehicle. After all, the auto industry is extremely capital intensive, and very rarely does the upstart Tesla post a profitable quarter. The controversial acquisition of the money-losing and highly indebted solar energy company SolarCity in 2016 only adds pressure to make sure the upcoming Tesla model is a hit.
The Model 3 starts at $35,000, or $27,500 with a $7,500 federal electric car tax credit.
One reason Tesla shareholders are applauding is because of a tentative production schedule Musk laid out following the initial “SN1” announcement.
“Handover party for first 30 customer Model 3’s on the 28th!” Musk tweeted, referring to July 28. “Production grows exponentially, so Aug should be 100 cars and Sept above 1500.”
“Looks like we can reach 20,000 Model 3 cars per month in Dec,” Musk said in a third tweet.
The exponential ramp-up in production will be necessary to reach the company’s ambitious goal to produce 500,000 cars a year by 2018. In 2016, Tesla made about 85,000 vehicles.
“The most significant development is the target for the 20,000 cars for the month of December, which is on target with guidance of 5,000 cars per week previously provided,” Kramer says.
In Kramer’s view, this gives the company a “clear path” to the 500,000-car mark in 2018, as Tesla further expands its Model 3 production capacity and Model S and X sales continue.
That said, Wall Street has generally come to view Tesla’s production goals with healthy skepticism.
The Model X crossover SUV was delayed roughly a year-and-a-half, incensing customers. The Model S sedan also faced production delays.
The stakes are much higher this time. Tesla has taken a confirmed 370,000 preorders for the Model 3, and all of those customers had to plop down a $1,000 reservation fee. The number of preorders has surely only grown since then, with some analysts estimating over 500,000 people have ponied up to reserve the car.
Lending credence to the fears of how well-equipped the company is to meet demand in a timely order, if you go to Tesla’s website to try to reserve a Model 3, you will be told that your delivery likely won’t arrive until 2018. And Musk recently hinted that meant late 2018.
So while technically Tesla is hitting its mid-2018 goal for Model 3 production, it doesn’t sound like production at volume will happen until later this year, and there’s still no known date for when delivery at volume will occur.
[See: Buying Tesla (TSLA) Stock: Either Brilliant or Devastating.]
What is known, however, is that there’s a lot riding on this rollout. Tesla shares have gained 70 percent in the last year, as the company surpassed both General Motors ( GM) and Ford Motor Co. ( F) in market value.
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TSLA: First Tesla Model 3 Coming Friday originally appeared on usnews.com
