Tesla pushes back Model 3 production target again, despite progress
Tesla delayed a 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 roll-out.
The electric-vehicle maker headed by Elon Musk said it would probably build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised. Instead, Tesla said it now plans to reach its goal of 5,000 vehicles per week by the end of the second quarter.
The further delay will leave analysts and investors focused on the implications for cash as we head through the first half of the year
The delay sent shares of the Palo Alto, California-based company down 2 per cent in after-market trading.
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 carmaker into a mass producer amid a sea of rivals entering the nascent electric vehicle market.
Building the car efficiently and delivering it without delays to customers is also critical, as the money-losing company faces high cash burn. Delays increase the risk that reservation-holders will cancel orders.
“The further delay to [production volume] will leave analysts and investors focused on the implications for cash as we head through the first half of the year,” Evercore analyst George Galliers told Reuters.