Tesla shares fall as Musk delays Model 3 production goal again
Bloomberg|
Jan 05, 2018, 06.41 AM IST
Tesla Inc pushed back a production target for its Model 3 again and shipped fewer of the sedans than expected, setting back Elon Musk's goal to mass-manufacture electric cars.
The electric-vehicle maker now expects to assemble 5,000 Model 3s a week by the end of June, delaying plans to reach that milestone 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 $1 billion in cash a quarter as it's had trouble scaling up Model 3 output despite spending heavily on the robots, assembly lines and tooling needed to produce them. The car starts at $35,000 and is pivotal to Musk's bet that mainstream consumers will buy battery-powered vehicles in droves once they become more affordable. 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.
"One you have it right you can ramp 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 delivered 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 $3.5 billion cash in hand and projected another $1 billion in capital expenditures during the closing months of the year. In postponing production plans, the company may also be deferring spending, said Jeff Osborne, an analyst at Cowen & Co. who has the equivalent of a sell rating on the shares.
"The big question is how much longer are people willing to wait?" Osborne said in a phone interview. "Every quarter that passes brings on more competition in terms of other vehicles being introduced."
The electric-vehicle maker now expects to assemble 5,000 Model 3s a week by the end of June, delaying plans to reach that milestone 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 $1 billion in cash a quarter as it's had trouble scaling up Model 3 output despite spending heavily on the robots, assembly lines and tooling needed to produce them. The car starts at $35,000 and is pivotal to Musk's bet that mainstream consumers will buy battery-powered vehicles in droves once they become more affordable. 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.
"One you have it right you can ramp 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 delivered 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 $3.5 billion cash in hand and projected another $1 billion in capital expenditures during the closing months of the year. In postponing production plans, the company may also be deferring spending, said Jeff Osborne, an analyst at Cowen & Co. who has the equivalent of a sell rating on the shares.
"The big question is how much longer are people willing to wait?" Osborne said in a phone interview. "Every quarter that passes brings on more competition in terms of other vehicles being introduced."
