Please ensure Javascript is enabled for purposes of website accessibility

Tesla, Inc. Delays Its Semi Truck Unveiling

By Daniel Sparks - Oct 6, 2017 at 9:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With troubles in Model 3 production being cited as one of the reasons for the delayed event, should investors be concerned?

For a third time, Tesla (TSLA -5.00%) CEO Elon Musk has delayed the electric-car maker's unveiling of its all-electric semi-truck. "Tesla Semi unveil now Nov 16. Diverting resources to fix Model 3 bottlenecks & increase battery production for Puerto Rico & other affected areas," Musk tweeted on Friday afternoon.

The delay comes shortly after Tesla whiffed on its important Model 3 production target for its third quarter. Could this be a sign that Tesla's Model 3 production is running into some serious troubles?

A teaser photo of Tesla's semi

Tesla Semi teaser photo. Image source: Tesla.

Tesla Semi

Tesla had originally planned on unveiling its electric semi truck, which it has referred to as Tesla Semi, in September. But when the company finally put a date on the unveiling, it said the event would take place on Oct. 26, nearly a month after Tesla was initially planning to show off the new vehicle. The new Nov. 16 date for the semi truck unveiling marks the third delay and puts the unveiling about two and half months after the electric-car maker's original time frame.

But Tesla asserts the delay isn't because of any specific issues with the semi truck itself. "Semi specs are better than anything I've seen reported so far," Musk said about Tesla Semi on Friday. "Semi eng/design team work is aces, but other needs are greater right now."

Musk's comments on Friday about the Semi suggest there could be some surprises in store. Tesla responded cryptically to a tweet that said the public already knows what Tesla Semi looks like, based on a recently leaked photo, saying, "Or do you?" 

First discussed in Tesla's Master Plan Part 2 last year. Tesla's semi truck, along with a future compact SUV and a pickup truck, will enable the company to expand to cover most major forms of terrestrial transport, the company said. Specifically, management said Tesla Semi "will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate."

Tesla is expected to emphasize driver-assist and self-driving technologies to help make operation of the semi truck both easier and safer.

Model 3 production bottlenecks

Though investors could overlook Tesla's decision to put greater focus on battery production for disaster relief in Puerto Rico and other affected areas for restoring power after Hurricane Maria, another mention of Model 3 production problems could be cause for concern.

Tesla vehicle production at Tesla's factory in Fremont.

Tesla vehicle production. Image source: author.

For Tesla's third quarter, the company said earlier this week that it only produced 260 Model 3 units. It had previously said it was "confident" it could produce 1,500 Model 3 units. To explain the significant miss, Tesla cited production bottlenecks but said the problems would be addressed quickly.

It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.

During Friday's tweetstorm, Musk also said Model 3 production is still "deep in production hell," referring to the early portion of the S-curve of the vehicle's production ramp-up in which production progress is slow but extremely important.

Currently, Tesla is only delivering Model 3 vehicles to employees, dealing with a more forgiving customer base as it works out production inefficiencies for the first vehicles. But Tesla has been guiding for "late October" for the first customer deliveries. On Friday, Musk said late October "is still possible, but not certain. Literally every day makes a big difference."

Investors should keep an eye on any updates from Tesla on its Model 3 production. While Model 3 production volume is minuscule today, Tesla is targeting a Model 3 production rate of 5,000 units a week by the end of the year. This ambitious target is looking much less likely at this point.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$697.99 (-5.00%) $-36.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.