Fri, Nov 03, 2017 - Page 10 News List

Tesla postponing mass production of Model 3 sedan

Reuters, SAN FRANCISCO

Tesla Inc on Wednesday pushed back its target for volume production of its new Model 3 sedan by about three months, saying that while progress fixing bottlenecks was made, it was difficult to predict how long it would take for all production issues to be fixed.

The company also reported its biggest quarterly loss ever, below analysts’ expectations, sending its shares down nearly 5 percent after-hours, after falling 3 percent in normal trade.

Tesla, led by Silicon Valley entrepreneur Elon Musk, said it now expects to build 5,000 Model 3s per week late in the first quarter of next year, from its original target date of next month.

Tesla said the main constraint it currently faced was within its battery module assembly line, where the company had to redesign part of the production process.

Money-losing Tesla’s long-term viability depends on the Model 3, its new sedan that starts at US$35,000, about half the price of its flagship Model S.

Tesla plans to produce 500,000 vehicles next year, mostly Model 3s, a six-fold increase over last year’s levels.

However, in the third quarter, the Palo Alto, California-based company made just 260 Model 3 sedans, due to “production bottlenecks,” it said.

It had planned to build more than 1,500.

Model 3 production delays mean postponed sales and exacerbate the company’s cash burn, made worse as Tesla pays to fix current manufacturing issues.

The problems could also worry the more than 500,000 customers who have put down a refundable deposit on the car.

Tesla posted a net loss of US$619.4 million, or US$3.70 per share, for the third quarter of the year, compared with a profit of US$21.9 million, or US$0.14 per share, a year earlier.

Revenue rose 30 percent to US$2.98 billion. Excluding items, the company lost US$2.92 per share.

The company said it had US$3.53 billion in cash and cash-equivalents as of Sept. 30, compared with US$3.04 billion at the end of the second quarter.

Last month, Tesla reported that it had delivered 26,150 vehicles in the third quarter, a 4.5 percent rise on the same period of last year, but added that “production bottlenecks” had left the company behind its planned ramp-up for the Model 3.

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