Tesla shares higher after Model 3 production boost

Lena Tucker
April 6, 2018

In the past seven days, Tesla produced 2,020 Model 3 vehicles.

Q1 deliveries totaled 29,980 vehicles, of which 11,730 were Model S, 10,070 were Model X, and 8,180 were Model 3. In a statement, the company said it aims to be making "approximately" 5,000 units per week of the Model 3 "in about three months".

Wall Street analysts that have seen Tesla shares plunge by 33 percent over the past six months were not impressed with Musk's stunt, and warned the company may be in default of its credit agreement and be forced to raise cash at firesale prices.

The results are a bit of a mixed bag for Tesla.

Many professional shorts (AKA hedge funds) judge it too risky and stay out of the game, but watch intently, and much of the Tesla share register (the longs) are in the "fanboy" classification.

Tesla's surge on Tuesday was foreshadowed by several analysts on Monday. Jumping into the numbers, Tesla built 34,494 vehicles in its "most productive quarter" in history. Tesla has become a very unusual share animal - what analysts call a "story stock".

An internal memo was circulated just days ago nearly alluding to this fact that showed the company asking for "volunteers" to aid in Model 3 production. At a cost of US$35,000 apiece, the company's debut electric sedan for the mass market promises a 215-mile (346-km) range, a sub-six-second 0-60 miles per hour (96.5 km/h) sprint and Tesla's evolving suite of autonomous driving technologies.

Consumer Edge Research Senior Analyst Jamie Albertine also expressed his optimistic expectations for the Elon Musk-led company.

The troubles reflect a reality overlooked by many people outside the auto industry: producing a quarter of a million cars a year in one plant is a daunting task. Shorts are, they're well aware that there is this catalyst coming that might actually be positive.

Competition isn't far behind, with Jaguar's i-Pace launching in early March at the high end, and the Model 3 facing the Chevrolet Bolt (launched last year), and a large number of similar long-range alternatives (including the Nissan LEAF 230-mile range version, Hyundai Kona EV, Kia Niro EV and Audi eTron) in 2018.

Announced in March 2016, and originally set for launch by the end of 2017, the Model 3 generated huge interest, with 450,000 (paid) reservation deposits plonked down.

According to certain sources, employees assigned to the production of the Model S and Model X could be transferred over to help increase production of the Model 3. As we noted in a previous report, Tesla temporarily shut down the Model 3 line back in February to address bottlenecks and improve its automation systems. Over the weekend, Tesla revealed that the driver had been using Tesla's autopilot software feature at the time, raising more questions about the safety of the company's self-driving technology.

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