Last quarter, Tesla promised that, despite its long history of delays, production of the Model 3 sedan would start on time in July. Surprisingly, the Model 3 actually did go into production without a major delay. We were even able to get an exclusive extended test drive of the most affordable Tesla yet.
According to Tesla’s second quarter report, the smooth launch of the Model 3 has resulted in an average of 1,800 new reservations per day. With Tesla claiming to have already had more than 450,000 reservations before the launch, it’s safe to say the electric automaker will have its hands full for quite a while. Tesla’s current goal is to ramp up production from 1,500 units a month in September to 20,000 units by December.
Tesla also claims that orders for both the Model S and X have been up, as well. In July, orders were reportedly 15 percent higher than normal for Q2. To meet demand, Tesla plans to increase deliveries of the S and the X while also scaling up production of the Model 3.
Assuming Tesla actually can pull off production increases for all three models, something Tesla CEO Elon Musk has called “production hell,” the biggest challenge will be making sure quality remains high. Few things would be worse for Tesla than the Model 3 getting a reputation as a reliability nightmare.
Tesla also claims that revenue increased significantly last quarter. Compared to Q2 2016, revenue was up a whopping 93 percent, mostly thanks to a 53-percent increase in deliveries. Unfortunately for Tesla, revenue was flat compared to the previous quarter, and it still burned through nearly $1.2 billion in cash. Tesla reports having more than $3 billion cash on hand at the end of the quarter.
Leading up to the launch of the Model 3, it was highly unlikely that Tesla would post a profit. But at the same time, despite claiming to still have $3 billion in cash reserves, Musk’s company will eventually have to start making money. A successful launch of the Model 3 shows it’s headed in that direction, but as this latest report confirms, Tesla definitely isn’t there just yet.