Troubling times may lay ahead at Tesla after a Reuters report broke news the Silicon Valley automaker cut part orders by 40 percent, starting in December. The company continues to have difficulty producing the affordable mass-market Model 3.
CEO Elon Musk said on numerous occasions the Model 3 remains deep in “production hell,” but slashing part orders forecasts a much lower output than first anticipated. The part orders, from Taiwanese parts maker Hota, are reportedly for gears and axles.
Tesla was scheduled to take delivery of 10,000 part sets per week by March 2018, and Musk previously believed the company would produce 5,000 cars weekly by next year. Additionally, it’s believed the few hundred Model 3s delivered were all hand-assembled. It’s a tough situation when 455,000 customers committed to their own Model 3.
This leads us to our own question: is GM vindicated? The automaker produces the Chevrolet Bolt EV as a true mass-market electric car and there are certainly no shortages. In the end, the Model 3’s bottlenecks will test Tesla’s brand power. Will customers remain loyal, or will they seek out zero-emission cars elsewhere as Tesla’s competitive advantage quickly becomes an industry standard?