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Tesla Finally Hits Model 3 Target

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Tesla Inc. reached a milestone critical to Elon Musk’s goal to bring electric cars to the masses — and earn some profit in the process — by finally exceeding a long-sought production target with the Model 3.

By building more than 5,000 of the sedans in the last week of the second quarter, Tesla “just became a real car company,” the chief executive officer said in an internal email Sunday obtained by Bloomberg News.

He may turn out to be right, if Tesla can hit these manufacturing again and again. After all, producing 5,000 units of one vehicle in a week is far from unheard of in the auto industry, and the company had to pull out all the stops to get to this point, including constructing a tent and makeshift assembly line next to its factory. What Musk still needs to prove is that this level of output can endure.

“Now that Tesla has achieved the 5,000 mark, it needs to do so on a steady, routine basis and with excellent quality,” said Michelle Krebs, an analyst with car-shopping website Autotrader.

Hitting the 5,000-a-week target is a major achievement for Musk, who first revealed the Model 3 in late 2016. It’s also a relief for customers who have waited for their cars for more than two years. Their patience has been tested by a series of setbacks that forced Tesla to push back the goal from an earlier plan to reach this level of production by the end of 2017.

The 47-year-old Musk said he celebrated his birthday earlier this week at the factory, where he had been posting photographs of drive units and the paint shop to his social media accounts.

“We did it!!” Musk proclaimed in the email to employees Sunday. “We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible. Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked.”

Optimism about the Model 3 transforming Tesla into a much bigger carmaker that sells to the mass auto market sent the company’s market capitalization past Ford Motor Co. and General Motors Co. for the first time last year. While production hiccups have led to tumultuous periods for the shares, they’re now up 10 percent this year, and the company is valued at $58.2 billion.

Musk wrote that, not only did Tesla “factory gate” more than 5,000 Model 3s, it may make 6,000 Model 3s a week next month. Including Model S and X production, the company had a “7000 vehicle week,” he wrote.

The key will be whether Tesla can keep this pace, said Dave Sullivan, manager of product analysis for AutoPacific Inc. “Reaching it is one thing,” he wrote in an email. “Consistently producing 5,000 per week with outstanding quality is another.”

Not impressed was Steven Armstrong, Ford Motor Co.’s CEO for Europe, the Middle East and Africa. “7000 cars, circa 4 hours (heart) Ford Team (heart)” Armstrong wrote on his verified Twitter account, parodying a similar tweet from Musk about Tesla’s weekly output.

The assembly plant reached the target by early Sunday, according to workers who asked not to be identified, with one saying cheers were heard at the end of the line around 5 a.m. local time. A photograph of employees signing a banner welcoming them to the “Model 3 5K Club” was deleted from Twitter and remains on Reddit.

Tesla is expected to release a formal statement on second-quarter vehicle production and delivery figures as soon as Monday. Here’s a rundown of what company observers still will have to look for in the release:

Under the Big Top

In early June, Musk told shareholders at Tesla’s annual meeting that he was feeling optimistic about Model 3 production thanks to a third general assembly line. It turns out that third line was being built outside — and under the massive tent.

How crucial a role this additional line played in achieving this goal remains an unanswered question. It’s also unclear how much longer the company will need this line and the tent, or if more outdoor assembly systems will be necessary to reach future targets.

Fits and Starts?

In the past, Tesla has said that it’s been able to boost production by idling its factories for short periods of time to address bottlenecks and upgrade equipment. Are more shutdowns in store, or does Tesla think it’s achieved a steady rate of production? What needs to happen to ultimately get to 10,000 cars a week, and when is that going to be achievable?

Concentrating on Cash

In April, Tesla said that by the third quarter, it would have the “long-sought ideal combination of high volume, good gross margin and strong operating cash flow,” and that the company wouldn’t require a capital raise this year. Musk cut 9 percent of Tesla’s workforce in June, the largest job reduction in its 15-year-history. Will the company give any update on its quest for profitability and its cash condition?

Having Reservations

Tesla opened the floodgates last week, inviting all Model 3 reservation holders in the U.S. and Canada to configure their car and put in their order, a step that costs $2,500.

The standard battery version of the car that starts at $35,000 still isn’t available in the design studio, so anxious customers can either order a higher-priced Model 3, continue to wait, or cancel their order. Will Tesla indicate what net reservations currently are?

Taxing Achievement?

Tesla doesn’t disclose vehicle sales by region, but it’s expected to hit 200,000 cumulative sales in the U.S. any day. That’s a critical threshold: Once an automaker hits that number of electric-vehicle deliveries, the $7,500 federal tax credit begins to ratchet down and phase out over subsequent quarters.

The company sent many cars to Canada in the second quarter, and Twitter is filled with posts from customers who say they are scheduled to get their Model 3 in July. If Tesla managed to put off the 200,000th delivery until after June, tens of thousands more customers will have a chance to take advantage of the full credit.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

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Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

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Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

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Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

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Crude Oil

Again NNPC Raises Petrol Price to N897/litre

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Petrol - Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.

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