Tesla Just Announced The Latest Model 3 Production Delay

Lena Tucker
January 6, 2018

Only 1,550 Model 3s were delivered in 2017's fourth quarter, the company said in an online statement Wednesday.

Throughout a year ago, Tesla Chief Executive Elon Musk had trumpeted a production level of 5,000 a week by December 2017. That end-of-the-quarter rate extrapolates to "over 1,000 Model 3s per week", according to Tesla. "We have them hovering about $1 billion in cash".

"Bears will point to this as another missed promise", said Joe Spak, an analyst at RBC Capital Markets, in a note to clients Wednesday.

Tesla shares closed lower for a second consecutive trading session on Thursday. Tesla delivered 103,082 cars in 2017, a 36% increase over 2016.

Despite continued headwinds with the Model 3, Tesla did manage to deliver more of its Model X, Model S, and Model 3 vehicles than in previous quarters.

Robert W. Baird & Co. analyst Ben Kallo said he sees Tesla having enough cash and additional liquidity sources to get through the revised 5,000-a-week schedule, meaning no capital raise will be required in the first half of this year.

The company has said more than 400,000 people have put down $1,000 refundable deposits on the Model 3. "That said, this continues to be a major focus by the market". Even though Tesla executives promised that things would be different with the Model 3, Tesla this week revealed that it was once again pushing back its production schedule for the Model 3.

For the entire past year, the shares of the NASDAQ-listed electric auto maker rose 45.70% following a 10.97% slump in 2016. "One you have it right you can ramp really quickly, but getting to that phase is the hard part".

Musk had previously predicted that Model 3 production could be ramped up to 20,000 cars per month by December.

While investors certainly won't look at another Model 3 production delay favorably, they may at the very least find solace in the fact that interest in the Model S and Model X is higher than it's ever been.

The company may need to raise another $1b to $1.5b over the next six months, Osborne said Thursday. These include the construction of new factories, the buildup of the solar and battery business, and the introduction of new models, such as the Tesla Semi, Roadster and Model Y. The company said it made significant progress on speeding up manufacturing of the sedan late last month, producing 793 units in the last seven working days. Now, the company says it expects to be producing 2,500 Model 3s weekly in the first quarter 2018, and 5,000 weekly by the end of June.

That pace of production is still below that of many carmakers.

Other reports by AllAboutTopnews

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