Tesla (NASDAQ:TSLA) reported a 4.5-percent increase in total vehicle deliveries in Q3, but deliveries of Model 3 were lower than expected as production of the highly anticipated mass-market model stalled due to "production bottlenecks", the company said on Monday.
In the third quarter, Tesla's deliveries were 26,150 vehicles, including 14,065 Model S, 11,865 Model X, and just 220 Model 3. The Q3 deliveries were 4.5 percent higher than in Q3 2016, and 17.7 percent higher than in Q2 2017, to become the best quarter ever, Tesla said. The electric vehicle and energy storage solutions maker now expects Model S and Model X deliveries to be around 100,000 this year, which would represent a 31-percent rise over last year.
But while Tesla was raising Model S and X delivery targets, analysts were closing monitoring Model 3 production and delivery numbers, which fell short of the company's own projections.
"Model 3 production was less than anticipated due to production bottlenecks. Although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected," Tesla said in its statement.
Elon Musk's initial expectations were "Production grows exponentially, so Aug should be 100 cars and Sept above 1500," and "Looks like we can reach 20,000 Model 3 cars per month in Dec."
Tesla's latest word regarding Model 3 is more modest: "It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."
Before Tesla announced its Q3 deliveries numbers, analyst Ben Kallo, who covers Tesla for Baird, issued a note last week, in which he said, as carried by CNBC:
"We believe Q3 will be the most challenging part of the Model 3 production ramp, and although we model 500 Model 3 deliveries, we think TSLA may be several weeks behind and likely missed its Q3 target of approximately 1,500 Model 3's produced."
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Tesla's stock was down more than 2 percent in pre-market trade on Tuesday.
While Model 3 deliveries are not as high as either Tesla or analysts had expected, the company has just sealed a deal with the government of South Australia to build the biggest battery in the world after a power outage sank the state into darkness last year-with Elon Musk promising to complete the project within 100 days, which came with a confident money-back guarantee.
By Tsvetana Paraskova for Oilprice.com
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