Elon Musk Begins Producing Vehicle That Could Make Or Break Tesla

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Chris White Tech Reporter
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Tesla CEO Elon Musk said Sunday that the company received federal approval to begin producing the much-anticipated Model 3, a vehicle many analysts believe could make or break the Silicon Valley automaker.

The inexpensive Model 3 “passed all regulatory requirements for production two weeks ahead of schedule,” Musk told his Twitter followers. He added that the first model will be completed Friday, bringing an end to several months of buildup.

Musk also tweeted that production on the highly touted vehicle will expand from 100 cars in August to 1,500 in September, and plateau to 20,000 per month in December. He announced a “handover party” will be held July 28 for the first thirty buyers of the Model 3, most of whom have made $1,000 deposits on the company’s first non-luxury vehicle.

Tesla raised its market capitalization to $51 billion in April, a number that is valued at about $1.7 billion more than GM. The two companies have wrestled for supremacy. Musk’s chronic inability to deliver products on deadline and his willingness to get distracted has some analysts spooked.

Analysts at Bank of America, for instance, believe Tesla’s acquisition of SolarCity could drag down the automaker’s valuation.

Tesla shares will fall within the next year to $165, a 46 percent drop from where the stock closed in April at $308.03 a share, according to BofA research analyst John Murphy. He claims the automaker will lose $2 per share over the next year, which is up from the $0.25 loss per share he forecast earlier this year.

Goldman Sachs analyst David Tamberrino mirrored much of Murphy’s concerns.

Tesla has done good work producing electric vehicles,  Tamberrino said February, but “our concerns are more near-term oriented with respect to operational execution on the Model 3 launch, an unproven solar business, and cash needs.”

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