Tesla blames its own hubris for missing Q1 production targets

Just as Tesla Motors tries to figure out how it will ramp up production to meet the huge and unexpected demand for its new Model 3 electric vehicle, the company has blamed its own “hubris” on its failure to meet its first quarter production targets.

In a downbeat announcement that came three days after the glitzy release of its Model 3 EV architecture, Tesla has revealed that it delivered 12,420 of its luxury Model S vehicles and 2,400 of its new Model X vulcan-winged SUVs.

These deliveries were almost 50 per cent more than the same period last year and the company insists it is on track to meet its target of 80,000 to 90,000 new vehicles in 2016, but it did come 1,200 short of its first quarter target.

Tesla blamed the lack of availability of around six parts to its vehicle, and its “hubris” in trying to do too much too soon with new technology on the Model X.

“The root causes of the parts shortages were: Tesla’s hubris in adding far too much new technology to the Model X in version 1, insufficient supplier capability validation, and Tesla not having broad enough internal capability to manufacture the parts in-house,” the company said in a statement.

“The parts in question were only half a dozen out of more than 8,000 unique parts, nonetheless missing even one part means a car cannot be delivered. Tesla is addressing all three root causes to ensure that these mistakes are not repeated with the Model 3 launch.”

The statement is timely as analysts, investors and observers consider how the company will meet its ambitious target of ramping up production to 500,000 vehicles by 2020 – a target it may need to meet a lot earlier if it is to keep its customer happy.

By the end of Saturday, more than 276,000 orders for its Model 3 – priced at a base $US35,000 – had been received in just three days, prompting founder and CEO Elon Musk to say the company will need to re-think its production ramp.

These vehicles will not go into production until late 2017, but Tesla will be keen to capitalise on the interest before consumers are attracted to other offerings and ask for their refundable deposit to be returned. A new plant in Europe is being considered.

The revelation that the company is 1,200 deliveries short of its first quarter target will be seized upon by those urging caution about investment in Tesla. But it does little to cloud the bigger picture.

As RenewEconomy wrote in its article “Tesla Motors’s Elon Musk just killed the petrol car” – the transition to EVs won’t be decided by the success or otherwise of a single company.

What Tesla has done is to uncover massive demand for its brand and the technology, and to help accelerate the pathway to the tipping point, where it will no longer make economic sense for consumers to favour petrol cars over electric cars, and the internal combustion engine will disappear from show-rooms by 2025.

Someone will meet demand, even if Tesla can’t.