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Tesla Motors Inc Model X Truant Spied on Factory Floor

Stephen Rhodes

Tesla Motors Inc has not been all that open about when those that have put down deposits for the Model X can expect to see their car. Those still waiting for delivery, which is everybody bar a handful of Tesla Motors friends, have heard very little about when the EV SUV will get to their door. A recent leak, however, shows that Tesla is making progress in Fremont.

Tesla Motors Inc (NASDAQ:TSLA)
Tesla Motors Inc Model X factory line

On the Tesla Motors Club forums on Wednesday afternoon user ChocoboLee reported that they saw six cars on the Fremont factory floor being tested. The user said they were “at the factory tour and was pleasantly surprised to see 6 Model Xs in the area where they are doing final inspections. The colors were signature red, white, blue, black, titanium metallic. There might have been another color or a duplicate of a color. They were stunning! I wonder if these are more founder cars or signature cars.”

Tesla Motors Model X starts getting tested

It’s not clear what state of production the Model X units seen by the forum user were, or whether the Model X they saw were just another clutch of units from the Founders Edition. Tesla Motors gave out six of those on September 29, the night of the big Model X launch. Since then it seems that the firm has been getting some more to Founders outside of the initial group.

Of greater note is the Signature Model X. We know that Tesla Motors hasn’t shipped a single one of these EV SUVs just yet. Some of the users on the Model X TMC forum hold the first bookings for the car. They’ve not even heard when their car will be ready to ship just yet, leaving them waiting with little info from Tesla Motors Inc .

If the cars that Chocobo saw on Wednesday’s tour were indeed from the Signature batch, that will give Tesla Motors Model X bookers a boost heading into Christmas. Given that there’s just about 40 days left until the end of the year, and a great many of those are holidays, Tesla Motors has its work cut out for it.

Apart from the TMC sighting, there’s been little to no info from Tesla Motors on the release of the Signature Model X. For those waiting for a normal, run-of-the-mill Model X, the wait is likely to drag on a whole lot longer.

Coming to terms with the Model X delay

Shares in Tesla Motors have been buffeted by the firm’s failure to get the Model X out the door on time. Elon Musk said that he would launch the car before the end of the third quarter but, though he stuck to the word of his promise, that rings hollow more than six weeks later. Tesla Motors still hasn’t been able to mass produce the Model X, and those with shares in the firm are worried.

The big problem, as revealed by Elon Musk on the firm’s most recent earnings call, is the second row of seats. Mr. Musk says that those seats are a “sculptural work of art,” but they’re so special Tesla Motors Inc couldn’t convince anyone else to build them properly.

That means spending a whole lot of money, likely in the millions, to bring the production of the Model X seats in house at Fremont. Tesla Motors, which never made seats before, is now making them for a car that’s already been delayed many times.

Given that Thanksgiving is on the way next week, it’s not likely that we’re going to see a Signature Model X on the road before the end of November. Tesla Motors will have to give buyers about a week to organize delivery, and it may take at least that long for Tesla Motors to ship the car to those living a little further out.

Those high up on the list for the Signature Model X will, buoyed by the news of a couple of units of the car on the testing spot at Fremont, be hoping to see their cars in the first week of December, or perhaps a little sooner. Those with money behind Tesla Motors, will be hoping for something similar.

Looking dangers at Tesla Motors

Tesla Motors Inc is a special sort of company and there’s few, barring those who reckon it’s a machine to suck government subsidies, that would disagree with that. There are, however, a lot of people who think it’s going nowhere, or that it’s more likely to fail than succeed.

Through the entire Model X debacle Tesla Motors has shown a few of its characteristics in crystal clarity. The firm refuses to compromise, but it gets things done. It won’t disappoint on features or quality, but it will disappoint on timing. It won’t settle for a low price, low margin car, but it will burn shareholder money.

It’s that last point that those with shares are really worried about. Tesla Motors is burning cash, and plans like bringing seat manufacture indoors could do a lot more damage going forward.

In the words of Barclay’s analysts “Wall Street may be underestimating how much spending remains ahead. TSLA does not boast a strong track record in spending efficiently, and its business strategy will keep it a capital intensive company.”

The research house reckons Tesla Motors will blow through around $11B in capital in the next five years. It has one of the more bearish forecasts for Tesla shares among the big Wall Street firms. Barclays thinks shares in Elon Musk’s firm will be worth just $180 in twelve months.

Tesla Motors has laid out a clear plan for its own future. The firm wants to have a major stake in the luxury car segment by 2017, and then it wants to launch the Model 3, its play for the mass market. At the same time the firm will be working on multiple fronts to make the Model 3 a possibility.

That means continuing to grow its brand, the SuperCharger network and the Gigafactory. That’s all expensive work, and Barclays may be right to be concerned about the future of the firm.

Tesla Motors Inc still hasn’t released the Model X, and the firm is likely a long way away from full production of the EV SUV. The car is a necessary part of the cash flow equation and, with it missing, it seems that Tesla will stay in the red on that front for quite a while.

If Tesla Motors solves problems with the Model 3 as it has solved those that afflicted the Model X, by simply throwing cash at them, the firm is likely to need a whole lot of it by the time 2018 rolls around. Whether or not shareholders and debt markets will give it to Elon Musk is what traders are really betting on today.

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