Tesla assuages cash concerns with promise of Model 3 progress

Nichole VegaApr 06, 2018

The electric auto company initially planned to produce 5,000 Model 3 sedans a week by the end of 2017, but that number was quickly revised as the affordable vehicle's production began faltering.

Although the most recent report represents another missed target, Tesla's investor communications were (unsurprisingly) positive. Given Tesla's history, we'll believe it when we see it. Tesla says it has about 500,000 advance reservations from customers for the auto. Ultimately, investors may either think that means the company is still struggling to meet its production quotas, or they may not care how the cars are made during the quarter, as long as they're made. Musk said on Twitter this week that he had been sleeping at the plant, and the company said some workers who normally assemble the Model S and Model X were shifted to Model 3 production.

The Moody's ratings agency last week downgraded the company's credit further into junk status, saying Tesla might run out of cash if it did not raise more than $2 billion.

The figures might also be a disappointment for Tesla, which has been promising much faster production for its more affordable Model 3.

Q1 deliveries totaled 29,980 vehicles, of which 11,730 were Model S, 10,070 were Model X, and 8,180 were Model 3.

If you want to add plug-in hybrids into the mix, Model 3 even beats the Toyota Prius Prime, which is now the best-selling plug-in hybrid vehicle in the U.S. with 6,468 units during the first 3 months of the year. The electric automaker said it manufactured 2,020 Model 3 vehicles in the last week of its first quarter, falling short of its 2,500 vehicle goal.

You may have noticed a distinct lack of detail about when the Model 3 will be touching down in Australia.

The firm said a series of short shutdowns had enabled it to address production and supply chain bottlenecks, allowing it to increase Model 3 production "exponentially". The company's stock price has dropped by more than a quarter over the past three weeks, according to a WikiTribune analysis. While the firm missed its target of 2,500 Model 3s per week, the 2,020 made over the course of the last seven days was close enough to appease the Street and beat numerous more bearish estimates.

"Maybe Elon Musk switched staff from Model S and X to Model 3 to get better production numbers for Model 3", NORD/LB analyst Frank Schwope said. The Model 3 output increased exponentially, representing a fourfold increase over last quarter. Experts say the carmaker needs to raise between $2-3 billion this year to finance the production of its newest model. "If this rate of growth continues, it will exceed even that of Ford and the Model T".

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