Since Tesla (NASDAQ:TSLA) CEO Elon Musk dropped the surprising news that he was considering taking the electric-car company private at $420 per share, headlines about the automaker have mostly shifted away from the company's important Model 3 production ramp-up. But whether Tesla goes private or not, Model 3 production remains the most important determinant for the company's long-term success.

Fortunately for Tesla investors, the automaker seems to be executing well on this front. After hosting factory tours for analysts, one of them is more bullish on Tesla's Model 3 production ramp.

Tesla vehicle production at the company's factory in Fremont, California

The Tesla factory. Image source: author.

A path to 8,000 cars per week

"Tesla seems well on the way to achieving a steady weekly production rate of 5,000 to 6,000 units," said Evercore ISI analyst George Galliers in a note to investors on Thursday (via CNBC). And Galliers said he sees no reason the company cannot produce 6,000 units per week and -- eventually -- 7,000 to 8,000 units "with very little incremental capital expenditure."

This supports commentary from management in the company's Aug. 1 second-quarter shareholder letter. At the time, Tesla had achieved a weekly production rate for the Model 3 of 5,000 units per week while sustaining a combined production rate for the Model S and Model X of 2,000 units per week. Looking forward, management said it expected weekly Model 3 production to climb to 6,000 units per week by late August with "limited" capital expenditures.

"We believe that increasing capacity by improving utilization of our existing lines and making selective improvements to address bottlenecks, rather than creating entirely new duplicated lines, will be the most capital efficient approach," management said.

Tesla had also said it expected the majority of Tesla's production lines to be able to achieve a production rate of 10,000 units per week by the end of the year. But total Model 3 vehicle production output isn’t expected to reach this rate until sometime next year.

Ultimately, Galliers said, his visit to the factory convinced him that his prior estimates for Model 3 production of 123,000 units in the second half of the year could be 4% to 7% too low. 

A crucial narrative

It would be difficult to overstate the importance of the Model 3's production ramp for Tesla. Even Musk recently admitted that the Model 3 was a "bet the company" situation.

A woman unlocks her Model 3 with a Tesla app on her smartphone

The Model 3. Image source: Tesla.

Tesla's trailing-12-month negative free cash flow of nearly $4 billion on revenue of under $14 billion highlights the amount of risk Tesla has taken on recently. And heightening the risk profile is Tesla's refusal to raise capital by selling equity for the remainder of the year. This means the automaker's cash position has been dwindling, falling from $3.4 billion in the fourth quarter of last year to $2.2 billion in Q2.

Tesla is betting that higher Model 3 production and delivery rates will help it put an end to its cash burn.

Maybe Tesla can pull off this feat after all.