It was supposed to be Tesla's year for delivering big on Elon Musk’s ambitious vision: the mainstream electric car known as the Model 3. And at the beginning of 2017, things looked great from the outside. But instead of delivering, 2017 was a year where Tesla stalled on that promise, and in the end was forced to buy itself more time with the strength of its brand and the promises of its CEO.
Tesla entered the year with around half a million preorders for the Model 3, each worth $1,000. Musk had promised in 2016 that the car would be at “production capability” by July 1st of this year — a date he called “impossible” to meet. In the end, Musk missed by a week. He tweeted a photo of the first Model 3 to come off the company’s production line on July 8th, just days after he announced that the first deliveries would come later that month.
“Handover party for first 30 customer Model 3's on the 28th! Production grows exponentially, so Aug should be 100 cars and Sept above 1500,” he wrote at the time.
At that event in late July, Musk managed to capture the attention and excitement of the masses by revealing the final version of a distinctly Tesla car. The buzz about the finished product dulled the fact that the company missed the mark on delivering to actual customers, instead opting to hand out the keys of what appeared to be pre-production models to his employees.
Musk swore at that event that Tesla was about to enter “production hell” in order to meet the Model 3’s demands. It was one prediction he got right. In October, the company revealed that it had only produced 260 Model 3s, well short of the 1,500 he promised in that time frame.
A report in the Wall Street Journal stated that the Model 3’s problems were tied to troubles with Tesla’s production line, with some early cars being hand built. Tesla, meanwhile, claimed there were “no fundamental issues with the Model 3 production or supply chain.” Nevertheless, the goal of making 5,000 Model 3s per week by the end of 2017 has been pushed into next year, and the milestone production figure of 10,000 per week in 2018 has already been abandoned for the foreseeable future.
The company burned through cash and still wound up behind production schedule
Slowdowns on the production line weren’t the only issue Tesla grappled with in 2017, as it faced mounting financial troubles. Though Tesla reported that it made money in parts of 2016, it reported losses in every quarter of 2017. Losses also doubled from the second quarter to the third, totaling more than $600 million. All in all, Tesla lost more money in three quarters than it did in all of 2016.
A significant part of Tesla’s DNA is also that its cars are supposed to be heading towards fully autonomous capabilities. But in September, the National Transportation Safety Board ruled that company overpromised on the abilities of Autopilot system, and that this contributed to the fatal 2016 crash between a Model S driver and a tractor trailer.
In August, it was revealed that the company has been working on new “backup” hardware for its Autopilot system in case the current one that’s built into its cars doesn’t wind up actually being capable of enabling full autonomy. (In 2016, Tesla split with Mobileye, the company that architected the first version of Autopilot.)
Meanwhile, Musk promised that Tesla would demo its self-driving capabilities by sending a Tesla from “a parking lot in downtown LA to a parking lot in downtown NY without touching the controls by the end of the year.” As of yet, that drive hasn’t taken place.
There are other parts to Tesla’s business, like SolarCity, though they are moving slowly. The first of Tesla’s Solar Roofs (announced in 2016) were installed on homes in August, with Musk being one of the first recipients.
Later in the year, Musk offered to restore Puerto Rico’s power grid after the catastrophic effects of Hurricane Maria in October. A children’s hospital in San Juan received Tesla Powerwall batteries and solar panels, while Musk donated $250,000 of his personal money to relief efforts in the territory. So far, no other projects to help with Puerto Rico backed by Tesla or Musk have been announced, and the contract to restore the island’s power went to another firm.
The strength of Tesla’s brand helped it pass some of America’s biggest automakers in market capitalization earlier this year, and the company is still adept at attracting talent. But the company recently fired hundreds of employees, and has endured claims of workplace harassment, discrimination and anti-union efforts — claims Musk and the company have vehemently denied.
Tesla ends 2017 on a high note thanks to Musk’s showmanship. The decision to surprise reveal the next-generation Tesla Roadster at the Tesla Semi truck announcement turned the event into one of the company’s most vibrant unveiling parties.
On the surface, Tesla went out on a high note thanks to Musk’s showmanship
The Semi truck arrives on the scene at a time when other startups and established truck manufacturers have announced intentions build similar products, and some are actively trying beat Tesla to its goal of an all-electric heavy duty truck. Tesla claims to have listened to the industry before jumping in, and that may be why high-profile companies such as Anheuser Busch and Walmart have already placed orders.
The Roadster revival once again gives Tesla a halo car, something that lets the company make claims of breathtaking acceleration, top speed, and range. Those are the things that wowed customers and wooed investors to Tesla in the first place, and the Roadster might help the company do it again. Of course, while Tesla is taking deposits now for both, these vehicles won’t go into production until 2019 and 2020, respectively — and that’s if they stay on schedule.
Tesla’s 2018 has potential to be much brighter than 2017. There are likely to be more announcements and new promises from Musk and the company. But what would make next year a good one for Tesla would be if the company keeps the promises made in 2016 and 2017.
Getting the Model 3 production up to full speed, while showing it can grow past some of the quality issues with its cars, is priority number one. Fixing the problems that have resulted in labor disputes and lawsuits is also key, as there has never been more EV startups waiting to poach good talent (both here and abroad). Last year, we said it seemed Tesla was finally growing out of youthful startup mode and into adulthood. 2017 proved the company still has a ways to go to reach maturity.
Final grade: C-
The Verge 2017 report card: Tesla
- Steady sales of Model S and Model X
- Improved quality reports for Model S and Model X
- Semi truck and Roadster unveils revive interest / faith in Musk
- Model 3’s production goals have been largely abandoned, leaving customers waiting
- Semi truck sales in 2019 and Roadster in 2020 raise eyebrows
- Autopilot isn’t “self-driving” yet, and that term keeps getting murkier