Tesla shares fall as analysts question sustainability of increased Model 3 production

Tesla shares fall as analysts question sustainability of increased Model 3 production

Shares of Tesla Inc. reversed course to trade down 4 per cent on Monday after Wall Street analysts questioned the electric auto maker's ability to maintain an increase in production that helped it meet a long-elusive target of making 5,000 Model 3 vehicles per week.

Tesla has hit its target of producing 5,000 Model 3 sedans weekly, just as CEO Elon Musk promised investors at the release of the company's Q1 financial results, Electrek reports, quoting an email Musk sent to all personnel praising them for the "incredible job". According to Musk's email, Tesla expects to produce 6,000 Model 3 cars per week next month.

No standard automotive solution could be built in time, so we created a new solution.

However, it has been burning through cash to produce the Model 3, and delays have also potentially compromised Tesla's position in the electric auto market as a host of competitors prepare to launch rival vehicles.

For the first time, Model 3 production exceeded that of the Tesla Model S and Model X combined. "We believe in rapid evolution", Musk tells the Times in an interview-it took place at 3am Thursday, the only time the company said he'd be available.

Musk continued to insist that he would hit the target of 5,000 Model 3s a week, and that it would give the company enough sales and profit to make it unnecessary to raise more cash.

The 5,000th vehicle of the week rolled off the production line on Sunday morning, according to Reuters. Tesla produced 53,339 cars in the second quarter, which made it the most productive in the company's history, it noted. To meet its June production goal, Tesla set up a massive tent outside its main factory that housed yet another assembly line.

That puts companies such as Ford and Tesla at a disadvantage to European and Asian manufacturers.

The electric vehicle manufacturer met its Model 3 production goals after erecting a new assembly line in a huge tent outside its main factory and getting staff to work extra shifts. In an effort to show sustainability/ improvement, company indicated 6k Model 3s/week expected late next month. Both orders and deliveries for Model S and X were higher in Q2 than a year ago.

11,166 Model 3 vehicles and 3,892 Model S and X vehicles were in transit to customers at the end of Q2, and will be delivered in early Q3.

In context: Tesla still has a substantial backlog of Model 3 pre-orders to wade through and the company's future is by no means guaranteed but it's a step in the right direction nevertheless.

The big question many had, though, was whether Tesla could reach its production goal of making 5,000 Model 3 per week. Reservation holders waiting for the Model 3 welcomed the news like a Christmas basket.

While the Model 3 production rate is a success, sceptics warn the recent burst may not be sustainable.

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