Tesla Inc’s assembly lines slowed and deliveries fell during a rocky start to the new year that is likely to magnify nagging doubts about the company’s ability to post sustained profits.
The Palo Alto, California-based company churned out 77,100 vehicles from January to last month, well behind the pace it must sustain to fulfill chief executive officer Elon Musk’s pledge to manufacture 500,000 cars annually.
The company only delivered 63,000 vehicles in the quarter, down 31 percent from the fourth quarter of last year. It cited a big increase in vehicle deliveries to Europe and China and “many challenges encountered for the first time.”
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The lower-than-expected delivery numbers and “pricing adjustments” will take a bite out of Tesla’s first-quarter net income, it said.
However, the company said it ended the quarter with sufficient cash on hand.
Tesla said it still expects to deliver between 360,000 and 400,000 vehicles this year.
The first-quarter production figures announced late on Wednesday lagged the 86,555 vehicles that Tesla manufactured during the final three months of last year, when the company was scrambling to make more cars.
That push helped Tesla post a profit in back-to-back quarters for the first time in its 15-year history.
The company produced 62,950 Model 3s in this year’s first quarter, up 1.6 percent from 61,934 in the prior three months.
Musk has acknowledged that Tesla’s hopes of becoming a consistent moneymaker are riding on the success of the Model 3 and a sport utility vehicle called the Model Y scheduled to be released next year.
For those vehicles to become hits, Tesla will have to be able to produce them in high volumes.
The company did not provide further details on how it fared financially during the first quarter. Its quarterly results are expected to be released late this month or in early next month.
Tesla attributed the production decline to cancelation of lower-priced versions of the Models S and X, a move the company said was designed to differentiate the more expensive vehicles from the Model 3.
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