Last year, with his back to the wall, Elon Musk finally proved that Tesla could ramp up production levels for its new Model 3 significantly — even if it came later and in lower volumes than he once promised.
This year, he will have to go one better. Producing at scale is no longer enough. Mr Musk is finally reaching the moment of truth for his would-be mass-market electric car: can he get the price to a low enough point to generate truly widespread demand, while still generating the sort of profit to justify his company’s valuation? After all, Tesla is still worth more than General Motors, which sold about 40 times as many cars last year.
Based on the evidence released on Wall Street’s first trading day of the new year, the signs are hardly encouraging. By rights, Tesla should have had a blowout quarter at the end of last year. It has finally been producing enough Model 3s to start eating into its demand backlog, and has sorted out the worst of its delivery bottlenecks.