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Tesla delays Model 3 volume production amid biggest-ever quarterly loss

02 November, 2017, 00:53 | Author: Melinda Barton
  • Elon Musk confirmed it had missed its Model 3 production goal for the third quarter producing only 260 vehicles compared to an earlier estimate of 1,500

The wait to get Tesla's highly anticipated Model 3 electric vehicle just got even longer.

Tesla's first mass market vehicle has been beset with manufacturing issues - and there' s no end in sight.

And the problems will continue.

Meanwhile, the production ramp-up has been expensive, pushing Tesla to its worst-ever quarterly loss in the third quarter, at $619 million.

Tesla said it had record net orders and deliveries of its Model S and Model X in the third quarter.

"Tesla is learning what traditional automakers have long known — mass vehicle assembly is complicated and expensive", said Michelle Krebs, a senior analyst at Autotrader.com. The insurer reported a net loss of $87 million, or 8 cents a share, in the quarter to September 30, after net income of $571 million, or 51 cents a share, in the same period a year ago. That was well below the $2.45 a share deficit that a consensus of industry analysts had forecast, according to Thomson Reuters. This is a significant milestone as the Tesla fleet is now about 100 times larger than it was five years ago, just before the launch of Model S.

The company also appeared to back off CEO Elon Musk's previous pledge to hit a production rate of 10,000 weekly vehicles sometime in 2018, saying in a letter to investors that would come sometime after the 5,000 benchmark is achieved. The company opened 18 stores and service stations worldwide during the quarter, and set up 126 new Supercharger stations to try to prepare for the increase in demand from Model 3 buyers. But the company clarified Wednesday that its Gigafactory plant in Nevada, which assembles battery packs for the Model 3, is "the primary production constraint" for the cars.

Tesla's shares fell 3 percent to close at $321.08 Wednesday, but in after-hours trading following the earnings release, the stock fell an additional 4 percent, or $12.83, to $308.25. The business had revenue of $2.79 billion for the quarter, compared to analysts' expectations of $2.50 billion.

Tesla, Inc, formerly Tesla Motors, Inc, designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products.

Last month, Tesla reported it delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of 2016. The stock recovered 53.6% since its low point and has performed 45.22% year-to-date. The Company operates through two segments: Automotive, and Energy generation and storage.



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