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Tesla cites 'bottlenecks' on low Model 3 output numbers

04 October 2017

It seems like Elon Musk's gamble didn't pay off as Tesla Model 3 deliveries missed their projected goals by a long shot.

"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.

Investors put aside worries about Tesla Inc meeting production targets for its Model 3 mass-market sedan to push the electric auto maker's shares higher on Tuesday, overturning an initial drop of nearly 3 percent.

Tesla said in a statement that the lower than anticipated manufacturing of the Model 3 was due to "production bottlenecks".

The Model 3 has become Tesla's most anticipated auto. "We comprehend what has to be repaired and we are confident of dealing with the manufacturing bottleneck problems in the near term". By comparison, Model S and X delivery rates in the third quarter were the best for their respective years.

Tesla chief executive Elon Musk has his sights set on adding a commercial electric truck alongside his mass-market electric cars.

Tesla called the third quarter "our all-time best quarter for deliveries" in an investor message posted online.

According to the Tesla, production bottlenecks are to blame for failing to meet its goals.

Tesla's delivery count for Q3-25,336 in total-varies from the production count because, as the automaker put it, "we only count a auto as delivered if it is transferred to the customer and all paperwork is correct".

Production on the highly touted vehicle was expected to expand from 100 cars in August to 1,500 in September, and plateau to 20,000 per month in December.

Tesla said after market close on Monday it delivered 26,150 vehicles, up about 18% sequentially and about 5% year over year.

"Let's face that the Model 3 is actually sort of a beta test right now", short-seller Jim Chanos, who's betting against Tesla shares, said on Bloomberg Television last week. Tesla produced 25,708 vehicles in the second quarter.

For now, Tesla's first "mass market EV" remains a scarce commodity. The production and sales for Model 3 is expected to go in full swing for Q4.