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Tesla deliveries at low end of forecast, starting Model 3 production

Published 03/07/2017, 22:29
© Reuters. Handout of Tesla Motors' mass-market Model 3 electric cars
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(Reuters) - Tesla Inc (O:TSLA) said it delivered about 47,100 electric sedans and SUVs in the first half of 2017, at the lower end of its own forecasts, shortly after Chief Executive Elon Musk announced that production of its mass-market Model 3 would start this week and build to 20,000 per month in December.

Shares fell 2.5 percent in regular trade on Monday to $352.62 after the Model 3 comments and eased down a touch more in after hours trade, following the first-half report.

Tesla said a "severe shortfall" of new battery packs had constrained vehicle manufacturing until June, and it forecast that second-half deliveries of the Model S sedan and Model X sports utility vehicle likely would exceed those of the first half. It had forecast first-half deliveries of 47,000 to 50,000.

Most investors are focused on the outlook for the Model 3, and some analysts have been skeptical about its planned July launch after production delays and quality issues marred the launches of the Model S and Model X.

Tesla's shares are up more than 60 percent this year, partly on expectations of a strong launch for its Model 3, the first car the company has aimed at the mass market. Tesla has a market value of $58 billion, greater than either General Motors Co (N:GM) or Ford Motor Co (N:F).

In a series of posts on Twitter late on Sunday, Musk said the Model 3 had passed all regulatory requirements for production two weeks ahead of schedule.

"Production grows exponentially, so Aug should be 100 cars and Sept above 1,500," Musk said. "Looks like we can reach 20,000 Model 3 cars per month in Dec."

That is in line with targets Tesla previously set, of more than 5,000 Model 3s per week by the end of this year and 10,000 vehicles per week "at some point in 2018".

Musk said he expected SN1 - the first car off the assembly line for sale - to be completed on Friday.

Tesla has taken deposits on more than 300,000 Model 3s, starting at $35,000 a vehicle. Its popularity stands out as major U.S. automakers face a downturn. GM and Ford both reported lower sales for June on Monday.

The Model 3 marks a turning point for Tesla as it transitions from a niche luxury car manufacturer to a mass producer. The 500,000 vehicles the company plans to make next year is nearly six times its 2016 production.

© Reuters. Handout of Tesla Motors' mass-market Model 3 electric cars

Reuters reported in February that Tesla shut down production at its California assembly plant for a week to prepare for production of the Model 3 sedan, in order to meet its target of starting production in July.

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