There has been three months remaining for the start of the production of the Tesla Model 3. The company is planning to choose a risky way to produce thousands of cars.
Tesla became the most valuable automobile manufacturer of the United States in the sense of the share and the market value in the first quarter of 2017 by leaving two well-established automakers, Ford and General Motors behind. Now, the company has to deal with more difficult cases in order to protect its market value. It must show that its production and sale capacity meet the market value.
The CEO of Tesla, Elon Musk stated that the production of Model 3 would start in July 2017, and the production capacity of the company would reach to an amount of 500,000 cars in 2018, which would increase the company’s production volume fivefold. These future expectations of Musk, have contributed to the valuation of Tesla’s stocks above 40 percent.
Now, most of the financial analysts are thinking about how Tesla will behave if the ambitious expectations of Musk are not realized. Many automobile manufacturers firstly form a prototype of the production line with cheap parts in order to test the production line of the new model they are producing. If there are any problems in the production line, they will have the opportunity to avoid major mistakes. Tesla will skip this step and begin production with expensive and original parts that will be used directly in Model 3 without any prototyping to test the production line of Model 3.
It is seen a very risky method for the company. If it does not work, the company can go bankrupt. If we consider that the company recalled 53,000 cars in 2017, we can understand how risky the company is acting.