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Tesla Falls Short of Model 3 Production Numbers

05 April, 2018, 01:58 | Author: Shawna Walton
  • Elon Musk

Tesla sought to squash any speculation it might need to raise more capital this year on Tuesday, driving the company's battered shares higher as it announced it built 2,020 of its cheaper Model 3 sedans in the last seven days.

Some analysts said there were signs that the company might have prioritised the cheaper auto, seen as crucial to its profitability, over its Model X SUV and its more-established and expensive Model S sedan. Some analysts have said that Tesla needs to produce around 5,000 Model 3s a week to generate enough cash to support its business-a milestone the company once said it could reach by the end of a year ago, and now is trying to reach by the end of June.

The company said it made 9,766 Model 3 vehicles in the first quarter, reflecting a four-fold increase from the fourth. The company had previously said that it would be producing 2,500 Model 3s each week by the end of the first quarter, and the company confirmed that it still hopes to make 5,000 Model 3 vehicles per week by the end of the second quarter. Tesla predicted high sales volume, good gross profit margins and strong cash flow.

Mr. Musk has been glorified by investors and the media as the one with all the answers: previous debt raises and equity issuances to fund Tesla, a company which has been churning through an fantastic amount of cash each year, have only sped up.

Another investor who said he has profitably sold Tesla shares short four times in the last 18 months was also sceptical.

This story will be updated. Meanwhile, Tesla's vehicles are still desirable.

CEO Elon Musk was lambasted by Wall Street analysts over the weekend for an April Fools' Day prank he posted on Twitter showing himself passed out, leaning up against a Model 3 sedan and holding a handwritten cardboard sign reading "bankwupt!". "My job as a CEO is to focus on what's most critical, which is now Model 3 production".

The increase in production will come as a relief to those patient Tesla enthusiasts on the waiting list though, as will news that the boss has taken over direct control of production. Investors have grown concerned as the company has struggled with what it has called "production hell." That compares with a total of 29,870 vehicles (including 1550 Model 3s) in the final three months of 2017.

Tesla's press release is not wanting for optimism though.

There are plenty of concerns making the rounds about Tesla Inc (NASDAQ:TSLA) these days, but one of the more eyebrow raising has to do with the amount of debt the company is carrying.

Tesla played up the positive in a statement Tuesday, despite missing its production target. "Looking at it today we believe the demand outlook remains robust and unchanged", said Joseph Dennison, portfolio manager at Zevenbergen.

Is Tesla Really in That Much Financial Trouble?


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