Tesla Motors
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Tesla Deliveries Miss Due to ‘Extreme’ Production Ramp-Up

July 5, 2016
The electric car maker fell more than 15% short of its second-quarter delivery goal, with a significant planned increase still to come for the second half of the year.

Tesla Motors Inc. delivered 14,370 vehicles in the second quarter, missing its forecast of 17,000 units because of what it called an “extreme production ramp” that saw half of the quarter’s production in the final four weeks.

The maker of electric cars and energy storage devices now expects to deliver about 50,000 cars in the second half, according to a company statement. That means 79,180 Model S sedans and Model X sport utility vehicles shipped for the full year, slightly below its previous range of 80,000 to 90,000.

Even after increasing its production, the carmaker has had trouble getting its vehicles to customers fast enough to meet its targets. Tesla said that 5,150 cars are still on trucks and ships making their way to clients who ordered them, and will be delivered in the first part of the third quarter.

Tesla is ramping up production at its Fremont, California, factory with an eye toward making 500,000 cars a year by 2018 — an ambitious timeline that also depends on the carmaker’s battery factory east of Reno, Nevada, coming online with battery cell production.

Tesla delivered 9,745 Model S vehicles and 4,625 Model X vehicles in the second quarter. The smaller, less-expensive Model 3, which is slated to start at $35,000 before incentives, is scheduled to begin deliveries in late 2017.

This marks the second time in a row that the carmaker’s deliveries come in short this year. In the first quarter, Tesla had blamed the shortfall on what it called “hubris” in adding too much new technology that led to part shortages for the Model X.

Tesla’s bad week started earlier, though, when, on Thursday, U.S. regulators began a preliminary investigation into a fatal May crash involving a Model S that had Tesla’s “Autopilot” feature engaged. In a blog post, Tesla said that the crash was the first known fatality in more than 130 million miles of Autopilot driving and that the feature, disabled by default in the cars, requires explicit acknowledgment by drivers who enable it that the system is new technology still in testing.

At least 70,000 Tesla vehicles worldwide have the Autopilot feature, and the fatal crash has drawn renewed attention to the debate over what kind of guidelines the National Highway Traffic Safety Administration should set regarding semi-autonomous and self-driving cars on U.S. roads.

Tesla is also contending with investor fallout after its $2.86 billion all-stock offer to acquire SolarCity Corp. last month. Tesla CEO Elon Musk is SolarCity’s chairman and largest shareholder.

The second-quarter deliveries figure is a preliminary number that may change slightly in August when the Palo Alto, California-based company reports earnings for the period. Tesla counts a vehicle as delivered if it’s transferred to the buyer and all paperwork is correct. The company releases global sales figures quarterly, instead of the monthly country-by-country results typically announced by other automakers.

By Dana Hull

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