Updated with current stock prices
Tesla (TSLA) - Get Tesla Inc Report reiterated on Wednesday a bold production schedule for its mass-market Model 3 sedan, a new model whose success analysts said is crucial to the company's current stock price.
On a call with analysts following the company's quarterly earnings release, CEO Elon Musk said the electric carmaker is expected to reach a volume production rate of 5,000 Model 3s per week in the third quarter and 10,000 per week in the fourth quarter.
In answer to an analyst's question, Musk conceded that a new stamping press needed to produce Model 3 parts at the assembly plant in Fremont, Calif., hadn't been delivered yet and would need to be debugged. In other words, just a few months prior to volume production, the new model's assembly line still hadn't been built.
Still, Musk's optimism is nothing if not contagious. He said during the analysts' call that "the question is really how long does it take to work out the bugs in the stamping line? And how many iterations does this one have to go through to get it operating smoothly? But it'll all be here and it'll be a hive of activity, and I'll be personally down there looking at the line as I was with the Model S line and I'm confident that I don't think that's going to be an issue."
Shares of Tesla fell 6% on Thursday to $257.44. The stock has risen more than 20% since the beginning of 2017.
Manufacturing experts from the auto industry have been scratching their heads since plans for the battery-powered Model 3 were announced, wondering how Tesla would be able to manufacture -- never mind, sell -- vehicles at a high rate of speed. Tesla's Model S and Model X are relatively low-volume vehicles by industry standards, built using much physical labor at low speeds.
The rate of output implied by Tesla's projection sometimes is difficult to achieve for experienced mass manufacturers like General Motors (GM) - Get General Motors Company (GM) Report and Toyota (TM) - Get Toyota Motor Corp. Sponsored ADR Report that have honed production techniques over decades. GM's Chevy Bolt EV, a competitor to the Model 3, has been rolling off an assembly line in Orion Township, Mich., since December.
"Tesla Motors operates on Tesla time. Quite frequently, the infectious optimism that pervades the company causes its leadership to announce release dates for products that are ... well ... aggressive," wrote Roger S. Pressman, an admirer of the company, its cars, and of Musk. "Often, Tesla will miss those dates, sometimes by a little, sometimes by a lot." Pressman has written a book called Getting Ready for Model 3.
Pressman's Deerfield Beach, Fla.-based supply company, EVannex, manufactures accessories for Tesla vehicles.
Tesla stunned the automotive world when it disclosed a year ago that more than 400,000 potential customers had sent the company $1,000 refundable deposits for the Model 3. Little has been said about the deposits since then. Assuming most or many convert their deposits to orders, Tesla will have a long line of eager buyers.
How long it will take the company to fill those orders remains an open question.
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.