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Business Impact

Tesla’s First Affordable Car Is Finally Entering Production

Question is, will the company be able to build the Model 3 at the rate it claims?

Elon Musk has announced that the Model 3, his automaker’s cheapest car yet, will begin to roll out of the factory as soon as Friday.

The vehicle, which will cost around $35,000, is Tesla’s first attempt at winning over mainstream car buyers. In the past, the automaker has produced vehicles squarely targeted at the luxury end of the market—with its Model S costing almost $70,000 before any extras are added. 

Tesla will deliver the new Model 3 sedan to its first 30 customers on July 28, which just meets the promised July deadline set out by Musk. But in building a populist car, the company must make it in quantity—indeed, 400,000 people have already paid $1,000 deposits to secure one of the vehicles.

The projections for increasing output are as ambitiously Muskian as ever. The automaker will build just 100 of the cars in August, but it hopes to increase that to 1,500 in September, then 20,000 in December. In 2018, it aims to pump out 500,000 of the vehicles in total, and then increase that to one million by 2020. 

Musk says that Tesla’s highly automated production line has been designed to make that possible. The Model 3 production line is intended to use fewer and fewer humans as time goes on—ideally until there are none to get in the way of the robots. “You can't have people in the production line itself, otherwise you drop to people speed,” he has said.

But as we’ve explained in the past, it is unclear whether Tesla’s facilities can keep up with the dramatic rates of increased production that Musk promises. While America’s largest auto plants do crank out more than 500,000 vehicles a year, they are established and stress-tested facilities that have slowly built up to that capacity. Tesla, meanwhile, will be debugging its facilities while increasing output at breakneck speed.

It’s not impossible, and if anyone can do it, it probably is Musk. He is, after all, a man who said he’d recycle rocket boosters, received incredulity from incumbents in the space industry, and then went right ahead and showed them all it was possible. Scratch that: he made it look easy.

But Musk has a hit-and-miss track record when it comes to meeting his self-imposed deadlines. While Tesla may this week hit its target for having the vehicle first roll off the assembly line, ensuring that they keep rolling at a fast enough rate will be quite another challenge.

(Read more: “Why Tesla Is Worth More Than GM,” “Tesla’s Next Broken Promise,” “What It’s Like to Be a Worker in Tesla’s Car Factory”)

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