Back in March, we highlighted an issue that could plague Tesla as it approached the production of its Model 3 sedan: A backlog of body shop repairs. The company said today that it’s planning to address the issue, in part, by opening the first Tesla-owned repair shops.
“To significantly improve the customer experience with out-of-warranty body repairs, we intend to open the first Tesla-owned body repair shops later this year and expand the existing network of third-party Tesla certified body shops,” the company said in a letter to investors today on its Q1 2017 earnings.
The issues, as we reported, stemmed from Tesla’s relationship with those third-party shops. Some of the locations Tesla relied on said the automaker took too long to send parts for repairs, while the company deflected blame back to the shops. In part, it has to do with Tesla’s direct sales method, so it doesn’t have a dedicated dealer network to conduct repairs.
It’s unclear how many Tesla-owned body shops the company plans to open.
At the time, Tesla told us it planned to expand its mobile repair service, as more than 80 percent of repairs are “so minor that they can be done remotely.” The company said in the letter today that it plans to add more than 100 mobile repair trucks by the next quarter.
The company posted a net loss in Q1 of roughly $330 million, 17 percent worse than a year prior, on about $2.7 billion of revenue. Interestingly, it still hasn’t provided guidance on vehicle deliveries for the rest of 2017, and said it won’t until after Model 3 production begins.
“We will provide guidance on vehicle deliveries for the second half of this year after we have started Model 3 production in July,” the letter said. “Given that we will be ramping Model 3 production so quickly, as we’ve noted before, even a couple-week shift in timing can have a meaningful impact on total deliveries.”
Tesla said it has about $4 billion in cash on hand, and—in an ambiguously-worded phrase—it reiterated that July is still the target date to begin production of the Model 3, with the hope of ramping up production to an incredible one million vehicles annually by next year.
“Simultaneously, preparations at our production facilities are on track to support the ramp of Model 3 production to 5,000 vehicles per week at some point in 2017, and to 10,000 vehicles per week at some point in 2018,” the letter said. So we’ll see how this substantial ramp-up plays out... at some point.