Tesla says its Model 3 production nightmare is almost over

  • Tesla says its Model 3 production nightmare is almost over

Tesla says its Model 3 production nightmare is almost over

Tesla didn't come close to achieving an initial goal to manufacture that many sedans a week by the end of past year.

Thursday's drop is a welcome sign for traders who have been loading up on bets against Tesla. Of the 2,425 Model 3 vehicles produced in the fourth quarter, 793 of them (or almost 33%) were made in the last seven working days of the quarter, according to Tesla.

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. 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. That's on top of the 220 Model 3s the company delivered in the third quarter, for a total of just 1,770 since the first deliveries in late July. The company will likely end the first quarter at a weekly rate of about 2,500 Model 3 vehicles. The carmaker has been blowing through more than $1 billion a quarter as it's had trouble scaling up output despite spending heavily on robots, assembly lines and tooling for the sedan that is Musk's cheapest yet, starting at $35,000.

Tesla announced delivery and production numbers for the fourth quarter of 2017 on Wednesday. Our 1Q Model 3 delivery forecast of 8k units implies a pace of less than 700 per week.

Still, Tesla managed to deliver 1,550 Model 3s in the last quarter of the year, after keeping analysts guessing for quite a while.

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 now expects to reach its goal of 5,000 vehicles per week by the end of the second quarter.

It'll take Tesla another three months to double that number.

Still, it was able to complete the cross-country journey in just 50 hours, using $100 to charge their Model 3 in that time.

Customers who pre-ordered a Model 3 will have to keep on waiting.

Tesla shares, despite paring some gains from a high of $385 in September, still trade at 46 percent above their price a year ago. But Tesla has skipped many incremental steps used by established carmakers when launching new products.

"Tesla is always a quarter away, and now you have to wait six months to get your report card on your investment thesis", Osborne said by phone Wednesday.