November 2, 2017 News of the Day: Tesla Loses $619 Million in Q3 & Builds Only 260 Model 3 Sedans, SF Motors Closes Acquisition of Automotive Assembly Plant In Indiana

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【Summary】November 2, 2017 News of the Day

Eric Walz    Nov 02, 2017 1:50 PM PT
November 2, 2017 News of the Day: Tesla Loses $619 Million in Q3 & Builds Only 260 Model 3 Sedans, SF Motors Closes Acquisition of Automotive Assembly Plant In Indiana

Tesla Loses $619 Million in Q3 & Builds Only 260 Model 3 Sedans

Tesla is struggling with production problems which is affecting its Model 3 production. Tesla CEO Elon Musk said in October the company was in "production hell" due to problems concerning production of the Model 3 sedan.

The company announced on Wednesday its results for the quarter ending September 30th and some of the numbers released are worrying to investors.

The major concern is the loss of $619 million. Tesla is still in expansion mode, however the huge loss is a new record. Tesla lost $336 million Tesla in the previous quarter and quite the contrast to the $21.9 million profit the company made during the same period a year ago, suggesting major struggles in dealing with Model 3 production.

The small electric sedan started production in July and during the three-month period Tesla only managed to build only Model 3s. That's well short of the 1,500 the company had hoped to build by September.

In a letter to shareholders, Tesla blamed insufficient supply of batteries from its Gigafactory for the Model 3 production woes. The company also said welding processes and final assembly tasks at its car plant were moving slower than other parts of the manufacturing system. It was revealed in October that Tesla had fired "hundreds" of workers at its car plant after conducting a performance review.

In an effort to speed things up, Musk told analysts on a conference call that Tesla will be "adding robots at the choke points" on the Model 3 production line.

Despite this, Tesla says it won't be able to build Model 3 sedans at the rate of 5,000 per week by December, as it had promised in July. The company now expects to reach that target in early 2018.

Despite the news, Tesla's revenues were higher than expected, coming in at $2.98 billion versus an expected $2.94 billion. Tesla also said it expects production of its Model S and Model X to total about 100,000 units in 2017.

SF Motors Closes Acquisition of Automotive Assembly Plant In Indiana


SANTA CLARA, Calif., — SF Motors, a Silicon Valley based electric vehicle (EV) company, today announced that the acquisition of AM General's commercial assembly plant (CAP) in Mishawaka, Indiana has closed. The deal to purchase to assembly plant was first announced in June.

SF Motors, which is the only EV company to establish its own U.S. and Chinese manufacturing capabilities, will use the plant for upcoming North American EV production as part of its global strategy to provide a new line of premium EVs.

With this acquisition, SF Motors gains the commercial real estate, production facility and equipment from AM General, but also a workforce with previous experience producing premium vehicles for manufacturers such as Mercedes-Benz and Hummer, at the place the vehicles were built.

As part of the closing, SF Motors plans to retain all of the current CAP employees through several phases, and is expected to preserve approximately 430 American auto worker jobs, which would have otherwise been lost once their current contract expires later this year.

As of the beginning of November, SF Motors has been working on the rollout of hiring plans. Xinghai Zhang, Chairman of Sokon Industry Group (SF Motors' parent company), said, "SF Motors values the employees of the South Bend-Mishawaka facility, as their experience and knowledge is invaluable and will greatly benefit the future products of our company, ensuring we deliver quality electric vehicles to U.S. customers. The first car from SF Motors will be made in Indiana. SF Motors' cultural values communication, cooperation and collaboration. We are excited to have the opportunity to welcome them to the SF Motors family."

SF Motors is also committed to supporting the economies of the South Bend-Mishawaka region and state of Indiana, which includes a significant investment in key upgrades to the CAP, and establishing worker-training programs. Specific details of the planned upgrades, retooling and training programs will be announced in the upcoming months.

"Today's announcement is a critical step toward a steady and growing workload at the Mishawaka commercial assembly plant. I am glad to see this transition is taking place on schedule, and I look forward to working with SF Motors to ensure the facility reopens as quickly as possible so employees can return to work," said Jackie Walorski, Indiana's Second District Representative. "This long-term investment in our community is a sure sign that the Hoosier workforce is second to none and northern Indiana will remain at the forefront of American manufacturing and innovation."

This acquisition builds on SF Motors' recent purchase of InEVit, a EV battery modularization startup headed by Tesla Co-Founder, Martin Eberhard.

Waymo Selects AutoNation to Maintain its Fleet of Self-Driving Minivans


AutoNation Inc. has partnered with Waymo, Google's self-driving car affiliate, in a multi-year service agreement.

AutoNation's franchise stores, AutoNation USA stores and other AutoNation locations will provide vehicle maintenance and repairs for Waymo's fleet of self-driving Chrysler Pacifica hybrids. Founded in 1996, AutoNation is the largest U.S. retailer of new and used automobiles and trucks.

AutoNation will provide "strategic capabilities to maximize the self-driving vehicle fleet's life across the United States," the nation's largest new-vehicle retailer said in a statement Thursday.

Under the deal, AutoNation will initially work with Waymo's autonomous vehicle program in the Phoenix and northern California markets.

AutoNation shares surged on the news alongside the company's third-quarter report, rising 10.8 percent to $52.74 as of 10:04 am ET.

Waymo has been developing self-driving technology since 2009. The company aims to bring Level 4 automation to the public, which means the vehicles can drive without human intervention.

Waymo is testing autonomous vehicles in six states: Michigan, Texas, Arizona, Washington, Nevada and California. AutoNation said it plans to expand with Waymo as the company adds brands and enters new markets. Waymo is currently testing a self-driving pilot program in Phoenix, Arizona which offers members of the public chauffeur services in self-driving Chrysler Pacifica minivans.

House Republicans Propose Repeal of $7500 EV Tax Credit


WASHINGTON — This week, House Republicans proposed repealing the $7,500 federal EV tax credit, a move that could affect the sales of electric vehicles.

Automakers are preparing more electric vehicles to get ahead of the competition, and EV sales mandates in some states only add to the pressure. Federal tax credits, as well as state incentives, have helped counteract high sticker prices typically seen with electric vehicles.

Gloria Bergquist, spokeswoman for the Alliance of Automobile Manufacturers that represents 12 major automakers, said the situation puts the industry "in the middle between contradictory government policies."

"There is no question that the elimination of the federal electric vehicle tax credit will impact the choices of prospective buyers and make the electric vehicle mandate in 10 states — about a third of the market — even more difficult to meet," said Bergquist, according to a report from Automotive News. However, supporters of the repeal argue EV buyers can do without incentives since they tend to be wealthier than average consumers.

The repeal, if approved, would begin after the 2017 tax year. It's part of an overall plan to reform the U.S. tax code and cut the corporate tax rate to 20 percent.

Under the current EV credit system, incentives are available to the first 200,000 qualifying vehicles from each automaker. However, no automaker has reached that limit yet.

As Automotive News points out, Tesla has quite a bit to lose from the repeal. It's currently trying to ramp up sales of the Model 3, its mass-market sedan. The automaker has secured hundreds of thousands of reservations, but an elimination of the federal tax credit could have consequences for the rollout of the less expensive Model 3.

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