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Tesla will start producing 2,500 Model 3s weekly by the end of the first quarter of the year, the company said in yet another update that disappointed thousands of people who have preordered the car as well as investors, sending its shares down by 2 percent after hours.
Still, Tesla managed to deliver 1,550 Model 3s in the last quarter of the year, after keeping analysts guessing for quite a while. On the one hand, this increase was pretty solid compared to the grand total of 712 Model 3s sold between July and November. On the other, however, the 1,550 deliveries fell short of analysts’ predictions: they had expected anything from 2,250 to 5,800 deliveries. A poll among nine analysts conducted by Bloomberg came up with an average estimate of 2,917 deliveries.
The ever-changing Model 3 deadline is not a unique development for Tesla. However, this model is being watched particularly closely as it is widely thought that this is the car that will make or break Tesla. For Tesla itself, it is the pinnacle of Elon Musk’s original strategy for the company: to make affordable electric cars.
However, the delays intensify the rate at which Tesla is burning cash—US$1.1 billion in the third quarter and about the same estimated for the last quarter of 2017—and worrying investors, who have yet to see a profit from Tesla.
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Initially, Tesla planned to roll out 5,000 Model 3s weekly by the end of the fourth quarter of 2017. Then that deadline moved the deadline to this year. Now, the company says it expects to be producing 2,500 Model 3s weekly in the first quarter 2018, and 5,000 weekly by the end of June. At some later point this year, Tesla said earlier, it should ramp up production to 10,000 Model 3s weekly.
Besides being bad for the share price, delays in the ramp up also threaten more preorder cancellations. Pre-orders for the Model 3 were through the roof after the company announced the launch, reaching over half a million by July 2017—a year after the announcement. Yet in the same period, 63,000 were cancelled, Elon Musk said during Tesla’s quarterly conference call in July—a figure he saw as insignificant as it happened over 12 months.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.