Tesla Inc. (TSLA ), the green carmaker, isn’t only having production problems with its Model 3 in the U.S. The company is also extending the launch in international markets until next year.
Tesla’s outspoken and controversial Chief Executive Elon Musk took to Twitter late last week to inform the world that the rollout of a left-hand drive Model 3 for Asia and Europe will happen in the first half of 2019 instead of in the second half of this year. As for right-hand drive Model 3s, which it’s making for the U.K. and other countries, it will “probably” launch in the middle of next year. (See also: Why the Bulls Still Believe in Tesla.)
Model 3 was designed for min engineering & tooling change for RHD. Note left/right symmetry. LHD for Europe & Asia first half of next year. RHD probably middle of next year.
— Elon Musk (@elonmusk) May 25, 2018
Delay Shouldn’t Be a Surprise
The tweet shouldn’t surprise too many investors given the production woes the company has been having in the U.S. But the tweet has prompted some speculation as to what Tesla is really up to. Online publication Electrek contends that Tesla is ramping up production of the Model 3 in the U.S. at the expense of international expansion to take advantage of a federal tax credit. According to the report, if it delivers its 200,000th electric car in the U.S. a $7,500 tax credit starts to get reduced after the end of the quarter that it hits the 200K mark. If Tesla pushed back international production it could focus on Model 3 production and reach the threshold in the third quarter, the report speculated. (See also: Why Tesla Is Burning Through Cash.)
Tesla Delays Cheap Model 3
The extension of when international customers can get its hands on a Tesla Model 3 comes at the same time the company is holding off on manufacturing the lowest-cost version of its Model 3 sedan. Calling it a life-or-death matter for the company, Musk said on Twitter last week that a $35,000 base Model 3 will not arrive until the company hits a 5,000 weekly production rate for premium versions of the car. He said the cheaper version of the Model 3 won’t ship until three to six months after it is producing 5,000 Model 3’s per week. Tesla hopes to achieve that rate by the end of June or the start of July. In the first quarter, the carmaker had a loss on every Model 3 it shipped. That’s with Tesla targeting 25% gross margins on the vehicle.