- According to Elon Musk, CEO of Tesla Motors, the company has received more than 500,000 reservations for the Model 3, the Wall Street Journal reported last week.
- To meet the September or October deadline, Tesla needs to produce at least 10,000 cars per week. Critics are concerned by potential parts delays because the company has missed production goals in the past.
- Tesla's popularity is believed to have sparked further interest by such other automakers as Volvo and GM, both of which have set ambitious goals for their own electric car production.
Tesla has ambitious timeline goals, but rushing product-to-design assumes your suppliers can rally their labor to meet that capacity. By increasing production, Tesla seems fairly confident in the strength of its supply chain. Dependent on a steady source of materials and parts, manufacturers with deadlines like Tesla understand that healthy relationships with suppliers are necessary in order to meet demand.
We've seen this problem most recently with Apple: according to a recent report, supply chain delays could cost Apple's initial iPhone 8 sales up to $17 million. We don't know exactly why Apple is behind schedule, but Apple's example shows how an inefficient supply chain can affect a company's bottom line.
Tesla's own supply chain deficiencies could be one reason why the company is still not profitable. In Tesla's early years, the company had no reputation with which to secure suppliers, and was also located at a distance from most part makers, who were unsurprisingly reluctant to invest in relocation, thus slowing Tesla's supply chain. Over the years, however, Tesla earned its suppliers' loyalty, compromising along the way: the company created its own logistics park in Fremont, California to attract suppliers, resulting in reduced transportation time and quicker problem-solving.
Although Musk referred to the current pressure to meet production goals for the Model 3 as "manufacturing hell," it's likely that Tesla will succeed in bringing the promised number of vehicles to market, thanks to its nearby suppliers. Whether Tesla can accomplish this will also be a testament to their suppliers' ability to scale and relationship with the company.