Tesla Model 3 deliveries fall short, production target delayed again

Jan 06, 2018, 01:40
Tesla Model 3 deliveries fall short, production target delayed again

The company will likely end the first quarter at a weekly rate of about 2,500 Model 3 vehicles. Instead, Tesla said it now plans to reach its goal of 5,000 vehicles per week by the end of the second quarter.

Tesla shares were down at $313.02 in afternoon trading.

Tesla delayed its production target for its new Model 3 sedan for the second time on Wednesday, disappointing investors even as it claimed "major progress" overcoming manufacturing challenges that have hampered the vehicle's rollout. The auto is the company's first lower-cost, mass-market-oriented electric vehicle, and hundreds of thousands of customers have reserved one.

But it was already hard to see how Tesla can sell the Model 3 at its $35,000 starting price and pull in 25 percent gross margins, which are typical of higher-end luxury cars, Brinkman said.

But at what point Tesla hits that inflection mark has been notoriously hard to predict.

Tesla has fallen short of Wall Street expectations by revealing that it delivered just 1550 examples of the Model 3 in the fourth quarter of 2017. The Model 3 must be right in terms of quality. During the last week of December, the company said, it made 793 Model 3s.

Tesla's slower ramp up in manufacturing Model 3s led analysts to speculate another capital raise could be coming. The company expects to hit a rate of 2,500 Model 3s per week at the end of the first quarter.

According to CNN Money, the 23 analysts, offering 12-month forecasts regarding Tesla Inc's stock price, have a median target of $310.00, with a high estimate of $500.00 and a low estimate of $155.00. For Tesla itself, it is the pinnacle of Elon Musk's original strategy for the company: to make affordable electric cars. The Model S and Model X both suffered delays but were eventually brought to market to rave reviews.

Serious problems turned up last summer at both the company's Fremont, Calif., auto assembly plant and its "Gigafactory" battery plant in Nevada that put the company in what Musk called "production hell". "While Tesla's repeated guidance revisions could begin to risk damaging its elite brand, a mass-recall would probably be far more damaging", he noted. GM launched the auto in 2015, far ahead of the $35,000 Model 3, Tesla's first mass-market vehicle, and it seemed like no contest at the time.

Tesla announced delivery and production numbers for the fourth quarter of 2017 on Wednesday.

Tesla delivered 29,870 vehicles in the fourth quarter, a 27% increase over the same quarter in 2016 and 9% more than the third quarter.

In a letter sent out by the Californian carmaker, it says it delivered 1,550 of its new vehicle in the final three months of 2017 - 2,550 fewer than predicted.