Tesla Expects To See Production Dip Due To Essential Factory Upgrades

American electric car manufacturer Tesla made a significant announcement during its Q2 2023 earnings call on July 19. The company confirmed that it is sticking to its target of producing 1.8 million vehicles this year.

Tesla acknowledged an anticipated temporary decrease in production during the third quarter. The reason behind this production dip was explained by none other than Tesla’s visionary CEO, Elon Musk, who assured investors that essential factory upgrades were in progress during Q3, as reported by Insideevs. Consequently, Tesla’s impressive Q2 performance, with 479,700 electric cars manufactured and 466,140 delivered, may be followed by a slower Q3.

Musk mentioned that the decrease in production is directly related to some of Tesla’s factories temporarily shutting down this summer to implement crucial upgrades. He said, “We continue to target 1.8 million vehicle deliveries this year. Although, we expect that Q3 production will be a little bit down because we’ve got summer shutdowns – for a lot of factory upgrades. So, just probably a slight decrease in production in Q3 for sort of global factory upgrades.”

Tesla’s Chief Financial Officer, Zachary Kirkhorn, echoed the same sentiment, ensuring stakeholders that the company is working hard to minimize the impact of these planned upgrades. He highlighted that the expected downtime for upgrades in factories would also entail some “idle cost” for the company.

The primary reason behind these factory shutdowns is most likely related to retooling efforts and production upgrades. Notably, Tesla is preparing the launch of two new models – the much-anticipated Cybertruck and the facelifted Model 3, codenamed ‘Project Highland.’

According to Insideevs, the Model 3 is currently under manufacturing process in two of Tesla’s plants: California’s Fremont Factory and China’s Gigafactory Shanghai. As Musk mentioned “global factory upgrades,” it’s possible that Project Highland is the driving force behind these temporary shutdowns.

The Fermont Factory, as of now, is undergoing an extensive overhaul. Tesla, however, has not officially confirmed whether the line upgrades pertain to Model 3 Highland. On the other hand, there have been sightings of test prototypes of both the Cybertruck and the facelifted Model 3 across the US. So, the company is definitely making progress in the testing process of the upcoming launches.