Tesla Still Finalizing Model 3 Design, Supply Chain

Tesla Motors Inc. hasn’t yet finalized the design of its Model 3 electric sedan or vetted the car’s network of suppliers, according to the company’s quarterly financial report.

The $35,000 car was publicly unveiled at the end of March and is scheduled to go into production at the end of 2017. Tesla says it has collected 325,000 reservations at a refundable $1,000 each for the Model 3 to date.

A smooth launch and strong sales for the Model 3 will be critical in helping Tesla become a sustainably profitable company. But CEO Elon Musk told analysts that the company may not complete engineering decisions about the Model 3 until early July. Critics point out that neither of Tesla’s current EVs—the Model S and Model X—met their original launch dates or initial production targets.

Musk also says Tesla now expects to achieve annual output of 500,000 Model 3s in 2018, two years sooner than originally planned. Skeptics consider that target extremely ambitious.

In the meantime, Tesla’s financial report indicates the company may invest more than $2 billion through the remainder of 2016 on the Model S. About $500 million of the total would be used to launch low-volume production at the company’s “gigafactory” battery plant outside Reno, Nev.