Tesla Inc postponed a production target for its new Model 3 sedan once again on Wednesday, disappointing investors even as it declared “major” development getting rid of manufacturing difficulties that have hampered the vehicle’s rollout.
The automaker’s CEO Elon Musk stated it would likely construct about 2,500 Model Threes each week by the end of the first quarter, half the number it had previously promised. Instead, Tesla said it now prepares to reach its goal of 5,000 vehicles weekly by the end of the second quarter.
The delay sent shares of the company down 2 percent in after-market trading.
The Model 3 is crucial to Tesla’s long-term success, as it is the most budget-friendly of its cars to this day and is the only one efficient in transforming the niche automaker to a mass producer in middle of a sea of competitors getting in the nascent electric vehicle market.
Developing the vehicle efficiently and delivering it without delays to consumers is also vital, as the money-losing company deals with a high cash burn. Delays boost the threat that reservation-holders will cancel orders.
“The additional delay to (production volume) will leave analysts and investors focused on the implications for money as we head through the first half of the year,” Evercore expert George Galliers informed Reuters.
The automaker burned through $1.1 billion in capital expenditures in its 3rd quarter and stated in November that fourth-quarter capex would likewise be about $1.1 billion.
RBC Capital Markets expert Joseph Spak wrote in a note that he did not believe the automaker will be required to do a capital raise.
In providing 1,550 of its new Model 3 electric vehicles in the 4th quarter, Tesla disappointed Wall Street expectations. Analysts had expected 4,100 Model 3 sedans to be delivered in the 4th quarter, according to firm FactSet.
The estimates for Model 3 deliveries by various brokerages differed extensively. While Evercore experts estimated 5,800 deliveries, Cowen experts expected only 2,250.