Tesla pushes back Model 3 production target for a second time
San Francisco — Tesla has again pushed back a production target for its Model 3 sedan, and shipped fewer of the electric cars than expected, as Elon Musk struggles to mass-manufacture the car he is counting on to grow the company.
Tesla now expects to assemble 5,000 Model 3s a week by the end of June — delaying that goal by another three months.
Tesla delivered 1,550 Model 3s in the final three months of the year, trailing analysts’ average estimate for about 2,900 units in a Bloomberg News survey.
Tesla has been blowing through more than $1bn in cash each quarter as it has had trouble scaling up Model 3 output despite having spent heavily on the robots, assembly lines and tooling needed produce them.
Pricing for the car starts at $35,000 and it is pivotal to Musk’s bet that mainstream consumers will buy battery-powered vehicles in droves once they become more affordable.
Once you have it right you can ramp up really quickly, but getting to that phase is the difficult par
The company initially planned to make 5,000 units a week by the end of last year.
"Tesla has really lofty goals for automation," Tasha Keeney, an analyst at ARK Investment Management, which holds Tesla shares, said in a phone interview.
"Once you have it right you can ramp up really quickly, but getting to that phase is the difficult part."
Tesla shares fell as much as 2.7% after the close of regular trading to $308.80. The stock climbed 46% in 2017.
Including Model S sedans and Model X crossovers, Tesla shipped a total of 29,870 vehicles during the fourth quarter.
The company delivered 101,312 Model S and Model X vehicles for the year, exceeding its forecast for 100,000 units. Sales of those more expensive models jumped 33% from 2016.
Tesla entered the final quarter of 2017 with about $3.5bn cash in hand and projected another $1bn in capital expenditures during the closing months of the year.
Chief financial officer Deepak Ahuja said during an earnings call in November that cash flow would improve significantly once the company was able to ramp up Model 3 output because Tesla would collect money from customers before paying its suppliers.