SAN FRANCISCO �� Tesla is expected to reveal next week whether it has reached its production goal of 5,000 Model 3s a week.
Falling far short of 5,000 a week would probably sink Tesla's high-price stock, analysts say. Meeting that manufacturing milestone, or even coming close, would probably drive the stock higher.
CEO Elon Musk has been downgrading his ambitions for Model 3 production since May 2016. With Model 3 production at a trickle that year, he promised 5,000 cars a week _ equivalent to 260,000 a year _ by December 2017. That was put off until the end of March, and now the end of June.
According to Bloomberg's Model 3 tracker, Tesla is now building 3,398 a week and so far has produced 38,559 Model 3s in total. In the past, Musk indicated that 400,000 Model 3s would be built in 2018.
But hitting the 5,000-a-week mark would still raise new questions about the cash-burning company's future.
Would a 5,000-a-week production level be sustainable, or would it represent a one-off "burst" rate that won't hold up?
Will demand continue as new electric cars from other luxury makers enter the market?
Even at a steady 5,000-car weekly pace of Model 3s, can Tesla sell the cars at a profit?
"If he meets the 5,000-a-week goal, great," said Mike Ramsey, an auto industry market analyst at Gartner. "It'll keep the stock from cratering. But the ultimate problem is, they need money to stem the tide of their cash losses. If they don't produce the vehicles, they don't get the cash coming in the door they need."
Musk has said the company won't require new infusions of debt or equity this year, although analysts widely agree that he'll need to raise billions of dollars more next year or cut back his ambitions.
Beyond its three existing cars _ Model S, Model X and Model 3 _ Tesla has announced an upcoming electric semi truck and a sports car. A crossover called the Model Y is under development. This week Musk teased an upcoming pickup truck on his Twitter account.
Some Tesla critics question whether demand for the Model 3 is waning because of persistent product shortages and reported quality problems. The company says it has 450,000 refundable $1,000 deposits for Model 3s.
Most reservation holders have been waiting more than two years to order their cars, much less have them delivered. Musk had planned high-volume, low-cost production of the Model 3 through an automation push so advanced he said his factories would be crawling with advanced robots and intelligent software that would make Tesla the most efficient manufacturer on Earth.
This month, though, Tesla erected a hangar-like open air "sprung structure" _ which even Musk calls a tent _ on a parking lot at its Fremont, Calif., factory to increase production.
Hollow Model 3 body frames are transported to the tent from the paint shop on forklifts. Inside the solid walls of the factory, engineers are scrambling to rework a problematic assembly line that Musk admits was over-automated.
But short interest _ essentially, bets that the stock price will plunge _ remains heavy, and critics have questioned Musk's veracity. Drone footage of the tent area posted on YouTube appears to show the tent filled mostly with cardboard boxes and little production.
Manufacturing expert Max Warburton of Bernstein & Co. told Bloomberg the setup is "preposterous ... . Here we have it, build cars manually in the parking lot."
The big problem with the tent is the extra worker hours required to assemble cars manually on a new line, said former General Motors Chairman Bob Lutz.
"The main issue is all the additional labor hours caused by a human-intensive manual line, which is what the tent will house," said Lutz. "The originally assumed hours per car, which had to be ridiculously low because it was to be an 'Alien Dreadnaught' super-automated production process, are now out the window."
Tesla has not responded to a request for comment.
Musk will have to be right about the tent's efficiency if he's going to make money on the Model 3. So far, the company has reported negative gross margins on the car, meaning it loses money on every Model 3 it makes, even before sales, service and other expenses.
On Tuesday, Tesla said it would open up the ordering process for all U.S. customers who've put down $1,000 deposits. That's when reservation deposit holders get a chance to configure their Model 3, place orders and put down an additional and nonrefundable deposit of $2,500 _ though they're not told how long they have to wait for their cars.
That raised questions for short seller Mark Spiegel of Stanphyl Capital: "Are they doing that even for the $35,000 cars they'll never build? Is inviting everyone indicative of really weak backlog or just a cash grab or both?"
Tesla said it intends to sell a $35,000 Model 3 but hasn't pinpointed when. It's unclear how many depositors had hoped to buy a Model 3 at or near its $35,000 base price. The lowest-price Model 3 starts at $50,000.
Gartner's' Ramsey said he thinks Musk would have been better off scaling back Model 3 production by a couple of hundred thousand and pumping them out on time, with less aggressive automation and higher quality.
"But it's in his DNA to double down when his targets are already ridiculous," he said.
