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Tesla starts making new Model 3 prototypes, says on track for production in July and 5,000 units/week by year end


Tesla released its shareholders letter today and gave an interesting update on the Model 3. The company seems hell bent on achieving production as soon as July 2017 and ramp up rather quickly to “volume production” in September.

They announced having produced new prototypes earlier this month and even having performed some crash tests.

Here’s the important part about the Model 3 in the shareholders letter:

“Model 3 vehicle development, supply chain and manufacturing are on track to support volume deliveries in the second half of 2017.  In early February, we began building Model 3 prototypes as part of our ongoing testing of the vehicle design and manufacturing processes.  Initial crash test results have been positive, and all Model 3-related sourcing is on plan to support the start of production in July.  Installation of Model 3 manufacturing equipment is underway in Fremont and at Gigafactory 1, where in January, we began production of battery cells for energy storage products, which have the same form-factor as the cells that will be used in Model 3.”

The company also clarified its plans for the production ramp up. They said that the Model 3 program is “on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018.”

Based on those predictions, it sounds like Tesla is determined to produce at least over 50,000 Model 3 vehicles by the end of 2017 – possibly a lot more.

In order to achieve that, Tesla is prepared to spend a lot of money . For the first two quarters of 2017 and before the expected start of Model 3 production in July, Tesla expects to invest between $2 billion and $2.5 billion in capital expenditures.

That compares to just over $520 million during the last quarter.

We should start to see a lot more of the Model 3 in the coming weeks and months leading to July. We will report back after the conference call with CEO Elon Musk to see if there are any more updates. Stay tuned.

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