Tesla Inc. once again announces that it has fallen short of production goals set for its new Model 3 sedan.
The announcement made on Wednesday disappointed investors despite claims of making “major progress addressing Model 3 production bottlenecks, with our production rate increasing significantly towards the end of the quarter.”
Demand for the sedan has soared but Tesla was hit with numerous obstacles in trying to increase production speed.
The electric car maker reported that it only made 2,425 of the Model 3 sedans over the last 3 months. This was far from Tesla chief executive Elon Musk’s prediction of 20,000 by December.
Musk advertised the Model 3 as an affordable, high-volume compact sedan. He also said that Tesla will be capable of selling 500,000 cars annually beginning on 2018.
Tesla stated last year that it hoped to make 5,000 Model 3s per week by the end of 2017. This was then pushed back to March 2018, and has now changed the date to end of June this year.
Analyst Jessica Caldwell said that Tesla’s announcement no longer came as a surprise considering its previous problems. But, she added, if the bottlenecks will continue, it might cause serious damage to the electric automaker.
“The further delay to (production volume) will leave analysts and investors focused on the implications for cash as we head through the first half of the year,” stated analyst George Galliers.
The delay shot down Tesla shares by 2 percent during after-market trading.
Production of the Model 3 sedans is critical for the long-term success of the company. This is due to the sedan being the most affordable of its cars to date. It is also the only model capable of making the niche automaker into a mass producer as more rivals enter the electric vehicle market.
Overall Sales Rise Despite Delays
Tesla surpassed its overall sales target for 2017.
Over the fourth quarter, the Palo Alto, California-based carmaker delivered 15,200 Model S and 13,120 Model X luxury cars. This was an increase compared the third quarter deliveries, rising 9 percent.
Tesla distributed a total of 101,312 Model S sedans and Model X SUVs last year, which rose 33 percent from 2016. Overall, 2017 has proven to be Tesla’s most productive year.