Instead, the firm is now saying it'll be making 2500 Model 3s a week by the end of this quarter, hitting the 5000 mark by the end of Q2. Tesla didn't come close to achieving an initial goal to manufacture that numerous sedans a week by the end of 2017.
At the time of publication, Tesla shares had dropped 2.01 percent in after-hours trading to $310.10 per share.
The Model 3 is critical to Tesla's long-term success, as it is the most affordable of its cars to date and is the only one capable of transforming the niche automaker to a mass producer amid a sea of rivals entering the nascent electric vehicle market. However, this model is being watched particularly closely as it is widely thought that this is the vehicle that will make or break Tesla.
However, the delays intensify the rate at which Tesla is burning cash-US$1.1 billion in the third quarter and about the same estimated for the last quarter of 2017-and worrying investors, who have yet to see a profit from Tesla. This includes moving some of Tesla's workforce from Model S and X production to focus on the Model 3. Tesla delivered 103,082 cars in 2017, a 36% increase over 2016.
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.
Tesla will start producing 2,500 Model 3s weekly by the end of the first quarter of the year, the company said in yet another update that disappointed thousands of people who have preordered the auto as well as investors, sending its shares down by 2 percent after hours. The company delivered 101,312 Model S and Model X vehicles for the year, exceeding its forecast for 100,000 units.
Tesla's bonds due in 2025 were quoted at 94.9 cents at 8:30 a.m., according to Trace bond price data, the lowest in about a month. "But I would not question their ability to finance at this point".
"Perhaps the issues that have significantly hobbled the Model 3 ramp really can be fixed in a cost-effective manner and shortly cycled past (although this did not happen in 4Q)", Brinkman said.
For the entire past year, the shares of the NASDAQ-listed electric auto maker rose 45.70% following a 10.97% slump in 2016.
Slow production could affect the number of Model 3 buyers who receive the $7,500 federal electric vehicle tax credit, and it is unclear whether this may drive away buyers, said Cowen analyst Jeffrey Osborne.
The company said it has made "major progress" toward eliminating Model 3 production bottlenecks. These will be counted as deliveries in Q1 2018, Tesla said. "They've kicked the can down the road".
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