Tesla stock falls on Model 3 delays, biggest-ever quarterly loss
SAN FRANCISCO: Tesla Inc pushed back its target for volume production on its new Model 3 sedan by about three months, saying it was difficult to predict how long it would take to fix all production bottlenecks.
The company also reported its biggest quarterly loss ever, sending shares down nearly 5 per cent after hours as the loss was bigger than analysts had expected.
Tesla, led by Silicon Valley entrepreneur Elon Musk, faces a crucial test in its growth strategy as it ramps up production of the Model 3, its new sedan that starts at US$35,000, about half the price of its flagship Model S.
Although Tesla has made inroads among luxury car buyers with the advanced technology and innovative design in its Model S sedan and Model X SUV, it is the Model 3 on which its long-term viability rests.
The company said it now expects to build 5,000 Model 3s per week by late in the first quarter of 2018 from its original target date of December.
Tesla said the main constraint was its battery module assembly line at its Nevada Gigafactory, where the company had to re- design part of the production process.
The Palo Alto, California-based company made just 260 Model 3 sedans in the third quarter due to what it called “production bottlenecks.” It had planned to build more than 1,500.
Model 3 production delays mean postponed sales could exacerbate the company’s cash burn, which Tesla estimated at US$1 billion in the upcoming quarter. The problems could also worry the over 500,000 customers who have put down a refundable deposit on the car.
Shares of Tesla have fallen nearly 17 per cent from a 12-month high of US$385 in September, but are still up 50 per cent from January fueled by belief in the long-term prospects of the company.
Tesla’s soaring stock has made the company the second-most valuable U.S. automaker behind General Motors Co, which had annual net profit of US$9.4 billion in 2016.
Tesla could face major new requirements for cash given Model 3 problems, a possible factory in China, and plans to develop other vehicles, including an electric heavy duty truck. — Reuters