During the conference call discussing Tesla’s fourth quarter financial results yesterday, Tesla CEO Elon Musk was quite vague about the Model X’s current production ramp, but he did confirm that the vehicle should reach its full production rate of 1,000 units per week during the second quarter in just a few months.
When asked about the current production rate and how the company plans to get to 1,000 units per week, Musk refused to comment but he added:
“Unless people actually understand how production works, they reach incorrect conclusions. We stick to what our projections are, and leave it at that.”
Although he didn’t want to comment on the current production rate, he did consider it fair to explain the problems with the ramp up during the fourth quarter 2015, which most people consider weaker than expected with only a few hundreds cars delivered by the end of the year:
“I think the mistake we made with the Model X, which I really think we’ve taken to heart at Tesla, is that we put too many new features and technologies, too many great things all at once, into a product.
In retrospect, it would have been a better decision to do fewer things with the first version of Model X, and then roll in the capabilities and features on new technologies over time, in subsequent years. So I do think that there was some hubris there with the Model X.
So the net result, however, is that I think the Model X is an amazing car. I honestly think it’s probably the best – I mean, I think it’s the best car ever. I’m not sure anyone’s going to make a car like this again. I’m not sure Tesla would make a car like this again.”
Chief Technology Officer JB Straubel added that most of the innovative features on Model X that caused some challenges in Q4 have been largely overcome today. These challenges included the operation of the Falcon Wing doors, and the sourcing and supply of the large panoramic glass windshield.
Musk added that the challenges are now about smaller less obvious parts of the vehicles. For example, he said the chrome finish around the front windows was a constraint for about 3 to 4 weeks and apparently the seals were a real challenge too:
“The seals have been a huge pain. I mean, essentially the seals had to be redesigned, and then the seals that we did have had to be reworked by hand in order to sort of fit correctly. Yeah. Seals are a bane.”
We were also wondering why we have yet to see official reviews of the Model X from the main car publications. Motor Trend and Consumer Reports are generally quick to get the latest Tesla for a review. In Consumer Reports’ case, they buy their own cars and don’t wait for manufacturers to send test units – I think it might generally be the case for Motor Trend too – but nonetheless Musk said that Tesla didn’t provide any cars to the media in an attempt to suppress demand for the Model X while the company was trying to manage the production ramp up:
“We’ve not provided cars to the media, because the logic is, we – to the degree that we could suppress demand for the Model X, we did. So, we took basically every action we could to suppress demand for the Model X, because we need to get production up. There’s no point in amplifying demand if production cannot meet that demand.
So, we did our best to really suppress demand, or simply not encourage demand. That’ll obviously change in the balance of this year, as we get cars to stores, because there’s been no Model X’s at stores, no Model X’s available for test drives. But in the coming months, I think probably next month, you’ll start seeing some reviews in magazines and whatnot. The feedback from customers we’ve gotten has been very positive.”
Finally, Musk said that Tesla should hit a peak production rate of 1,000 Model X units per week during the second quarter and an average of about “700 vehicles or 800 vehicles” per week. Combined with the Model S, Tesla will average a total production rate of 1,600 to 1,800 units per week.
Musk added that he doesn’t know what the mix of sedans and SUVs will be, but the company should have a better idea once the Model X joins the Model S in the showrooms and they get to see customer reactions. The current focus remains to get reservations holders in the vehicle and try to convert the reservations into orders. The “Meet Model X” events should go a long way to help convert these reservations.