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Elon Musk just made a totally mind-blowing change to Tesla's strategy

May 5, 2016, 03:41 IST

Tesla CEO Elon Musk speaks about new Autopilot features during a Tesla event in Palo Alto, California October 14, 2015.REUTERS/Beck Diefenbach

Tesla reported first-quarter earnings on Wednesday, and they were better than expected: Tesla lost less money than analysts thought the company would.

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After the numbers hit, CEO Elon Musk and his team held a conference call. And Tesla kicked it off with bang.

For years, Musk has said that Tesla wants to be delivering 500,000 vehicles per year by 2020.

But massive pre-orders for the Model 3 car that was unveiled in March - some 400,000 - have compelled Tesla to change that plan.

Musk now wants to hit 500,000 by 2018, a full two years ahead of schedule.

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He called it the biggest "strategic change" that Tesla is now making.

"Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it," Tesla said in a letter to shareholders.

Up to now, Tesla has managed to build and deliver a maximum of about 50,000 vehicles in a single year. And that max was achieved last year, when Tesla downgraded its delivery guidance several times during the year.

This year, Tesla is sticking to its 80-90,000 delivery guidance.

But it's clear that the Model 3 has significantly altered Tesla's planning for the future.

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On the call, Musk stressed that as good as Tesla is at design and technology, the company needs to up its game as a manufacturer.

"We take it very seriously, and we need to solve it if we're going to scale and scale rapidly," he said.

Musk will evidently take personal responsibility for upping Tesla's production pace. He said that he has desk at the end of a production line at Tesla's factory in Fremont, CA, and that he also keeps a sleeping bag there.

But make no mistake: getting to 500,000 in annual deliveries in just two years is going to be the biggest challenge Tesla has yet confronted.

So he took the opportunity to put out a call for help.

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He asked the "best manufacturing people in the world" to join Tesla. He added that the company's "hellbent" focus would be to get "super good at making large complex objects."

NOW WATCH: Elon Musk admits that Tesla may not be prepared to meet demands for $11 billion in preorders for their new Model 3

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