Tesla Model 3 delay raises cashflow risks, but analysts upbeat

Tesla misses production goals for all-electric Model 3 sedan

Model 3s are finally getting delivered to non-employees - we got ours last week - which means an end to the NDAs and no-reselling agreements Tesla made employees agree to in order to get priority delivery of the auto. Previously, Tesla was hoping to reach the 5,000/per week rate by the end of March.

Tesla shares pared losses Thursday after falling as much as 3.6 per cent, the biggest intraday drop in five weeks.

However, it said it made "major progress" in addressing the issues during the period, meaning its production rate grew significantly towards the end of the three month period and it has made as numerous vehicles in the weeks since Dec 9 as it did in the four months previously.

"We believe a fundraise will be necessary for Tesla in 2018", Brian Johnson, an analyst at Barclays, wrote in a report to clients Thursday.

In its third quarter, Tesla built just 260 Model 3s.

Tesla said it reduced production of its Model S and Model X in the fourth quarter to put more of its workers on the Model 3.

Although bullish investors have generally waved off early Model 3 problems, instead focusing on the future prospects of Tesla, critics warn that Model 3 issues could sour demand for Tesla's mass-market vehicle, delay sorely needed revenue and compromise the company's ability to raise cash in the future.




As a result, now that owners have their cars and can do what they want with them, some of them are trying to make a little side cash on Turo, a website where owners can rent their cars out for a daily fee.

Beyond the Model 3, Tesla's overall auto deliveries were on target for the fourth quarter and the year as a whole.

The Elon Musk-led company now expects to assemble 5000 Model 3s a week by the end of June, delaying plans to reach that milestone by another three months.

Tesla said on Wednesday it shipped 1,550 Model 3 cars to customers in the fourth quarter of 2017, with another 860 Model 3 cars in transit to customers. It also surpassed its 100,000-vehicle goal for 2017.

The estimates for Model 3 deliveries by different brokerages varied widely.

Slow production could affect the number of Model 3 buyers who receive the $7,500 federal electric vehicle tax credit, and it is unclear whether this may drive away buyers, said Cowen analyst Jeffrey Osborne.

"Perhaps the issues that have significantly hobbled the Model 3 ramp really can be fixed in a cost-effective manner and shortly cycled past (although this did not happen in 4Q)", Brinkman said. But Tesla has skipped many incremental steps used by established carmakers when launching new products.

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