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Tesla hits 5000-a-week Model 3 production goal

03 July 2018
Tesla hits 5000-a-week Model 3 production goal

Shares of billionaire Elon Musk's Tesla Inc (TSLA.O) fell in volatile trading on Monday as investors pocketed some profits after the company announced it had hit a production milestone for its Model 3 cars.

In an email to staff Sunday, Musk noted that Tesla's Model S and Model X cars had also met their production targets, bringing the combined total of finished electric vehicles to 7,000 in a single week. But that's not all.

Tesla more than doubled its weekly production rate for the Model 3 during the most recent quarter with the help of a new assembly line built under a tent.

Now, based on the current reviews, which have been mostly glowing, and my own experience with the auto and people who have driven the vehicle, I think the enthusiasm for the Model 3 will be even crazier in the coming weeks and months, which is saying a lot.

But the company still only managed to crank out an average of 2,198 per week for the quarter.

Tesla will have to prove to investors that it can sustain and increase its production pace, and some sceptics have bet against the company.

More than two years ago, Musk said the Model 3 would have a range greater than 200 miles and a retail cost of $35,000 (without any tax credits or subsidies). This could denote that the pickup will be less of a luxury product and more of a genuine work vehicle, and we hope it will be priced accordingly.

If it still needs to be said, statements of Tesla's expectations should be taken with a fairly hefty serving of salt.

Tesla has been trying to hit a 5,000 per week production target of its Model 3 cars for months after facing production obstacles.

The Model 3, which is built at a factory in Fremont, Calif., retails for as low as $49,000, according to the AP.

Bottom line, "Stock likely to experience some relief on achieving 5k Model 3/week since if this pace can be repeated, Tesla should turn into a self- funding company". But he also warned at the time that Tesla was entering at least six months of "manufacturing hell".

Tesla said on Monday that some of its Model 3 production would be on break as part of the July 4 holiday, with production to resume on Thursday. These will be counted toward the automaker's third-quarter delivery tally. Of those, 18,440 were Model 3, 10,930 were Model S, and 11,370 were Model X. He reiterated a Sell rating and $195 price target on the shares today, writing that while the company did make its production goal, as he expected, Model 3 deliveries missed his bearish estimates.

The electric automaker faced Wall Street skepticism in the last few months due to forecasts of how much cash it was burning through every quarter, and how much cash it would need to keep production going.