Can Tesla Q4 production meet soaring demand?

Musk cites "high-class problem" of demand being higher than production.

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electric vehicle made by Tesla on the road.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Tesla Inc (NASDAQ: TSLA) is telegraphing that the company is experiencing strong demand for its vehicles in the fourth quarter, but the company will need to ramp up production in order to take advantage of the surge in orders. That's according to an email to Tesla employees authored by CEO Elon Musk.

The enigmatic leader said the company was "fortunate to have the high-class problem of demand being quite a bit higher than production this quarter". He went on to say that the company would "need to increase production for the remainder of the quarter as much as possible". Musk also insisted he would only send this note "if it really mattered". 

At the start of 2020, Tesla originally said that deliveries of its cars would easily surpass 500,000 this year, though the onset of the coronavirus pandemic just months later cast a pall over the company's ambitious forecast.

Musk has steadfastly refused to abandon the company's initial goal, even urging employees earlier this quarter to keep up the pace. "This all comes down to Q4. Please take whatever steps you can think of to improve output (while increasing quality)," Musk said in an email to employees in early October. 

Tesla delivered a record-setting 139,300 cars in the third quarter, smashing the previous record, which stood at 112,000. At the same time, the company said 145,036 vehicles rolled off the production line. Tesla has surpassed expectations for each quarter thus far in 2020. The company delivered 88,400 vehicles in the first quarter and another 90,650 in Q2. 

Tesla would need to achieve another personal best in order to top its original forecast. To hit its goal of 500,000 for 2020, the company will have to deliver 181,650 vehicles, a 30% increase from its record deliveries last quarter.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena owns shares of Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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