Worries about whether Tesla would meet its promises on production of its Model 3 mass-market sedan in the months ahead sent the electric car maker’s shares more than 2 percent lower on Tuesday as those in rivals climbed.
The moves also followed a series of announcements by rival General Motors on its own electric car ambitions, which included a promise to take ‘bold steps’ toward the first completely driverless vehicles.
However, by mid afternoon the price had recovered and Tesla shares rose just over 1 percent in midday trading in New York.
Tesla said on Monday its deliveries rose 4.5 percent in the third quarter from the prior-year period, but said ‘production bottlenecks’ had left the company behind its planned ramp-up for the new Model 3
Tesla strove to play down any longer term risks to the company’s targets when it published delivery numbers on Monday that showed output continuing to rise but ‘bottlenecks’ preventing it meeting its Model 3 targets.
The company, which warned when it launched the sedan in July that it was entering ‘manufacturing hell’, has so far delivered just 220 Model 3 cars and produced 260 during the quarter.
It had targeted 1,500 sedans in the quarter and to take production to 5,000 a week by the end of the year.
‘We see the 5k a week production goal to exit 2017 at risk given the lack of disclosure provided in fixing the ‘handful’ of subsystems that are taking longer than expected,’ said Cowen and Co analysts, who already rate Tesla an underperform.
‘We remain negative on shares given the execution that is currently priced in despite anticipated competition and capital needs.’
Others were more upbeat, arguing dips in a stock that has climbed 60 percent this year may be an opportunity to buy.
‘Most auto launches have hiccups, and Tesla is no exception,’ Morgan Stanley analysts wrote in a note.
Tesla said that there were no fundamental issues with the Model 3 production or supply chain and production issues would be addressed in the near term.
‘Although Model 3 deliveries were slightly below the range, production challenges were expected for the first quarter of Model 3 production, and we expect production to significantly increase in Q4,’ Baird analysts wrote in a note.
Tesla said overall its deliveries rose 4.5 percent in the third quarter from the prior-year period, but said ‘production bottlenecks’ had left the company behind its planned ramp-up for the new Model 3 mass-market sedan.
Tesla said it delivered 26,150 vehicles in the third quarter, including 14,065 Model S vehicles and 11,865 Model X cars, up 17.7 percent from the second quarter of this year.
The company, based in Palo Alto, California, delivered just 220 Model 3 sedans and produced 260 during the quarter.
It began production in July of the Model 3, which starts at $35,000, half the starting price of the Model S.
Tesla launched production of the Model 3 in July and said in early August that it was ‘confident’ it could hit production of just over 1,500 cars per week in the third quarter.
The first 30 models were handed over to customers during a glitzy ceremony at the company’s factory in California last Friday. It came two days after the environment secretary Michael Gove announced a ban on the sale of petrol and diesel cars from 2040
‘It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain,’ Tesla said in a statement.
‘We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.’
Tesla said it was on track to deliver around 100,000 S and X models this year.
The production figures for the Model 3 are also well below the company’s earlier projections in a regulatory filing, when it said: ‘We expect to achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017.’
Tesla-CEO Elon Musk speaks during the delivery of the first more reasonable Tesla vehicle Model 3 in Fremont, US, 28 July 2017.
The company rushed this year to launch the Model 3 sedan and quickly ramp up production to reach a target of 500,000 cars per year in 2018 Tesla said on Monday that a handful of systems at its Fremont, California, car plant and its battery factory in Reno, Nevada, ‘have taken longer to activate than expected.’
The automaker said 4,820 Model S and X vehicles were in transit to customers at the end of the third quarter and would be counted with its fourth-quarter figures.
In after-market trading, Tesla shares fell more than 1 percent to $337.84, from the close on Nasdaq of $341.53.