Tesla delays production of is mass-market Model 3 vehicle

Tesla Model X

Tesla Model X

Tesla Inc.'s first attempt at high-volume production isn't going as well as it hoped - and the company has a record quarterly loss to show for it.

In the third quarter, Tesla reported a loss per share of $2.92 compared with a 71 cent profit in the same period of 2016. That was a far bigger decline than Wall Street had predicted.

Its shares fell 5.4 percent in after hours trading.

Tesla's first effort at a mass market electric vehicle - hit production problems, slowing down output on the auto that many Wall Street analysts consider to be the key to the company's ongoing success.

Tesla previously said it would make 1,500 Model 3's during the last quarter, but the firm dramatically undershot that goal.

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

And the problems will continue.

Musk also said he believes that Tesla's hardware in terms of autonomy is better than any other option out there by a lot, which, combined with his earlier comments regarding hardware news to come soon, could suggest details on upgraded equipment to be revealed in the future.

"Tesla is learning what traditional automakers have long known - mass vehicle assembly is complicated and expensive", said Michelle Krebs, a senior analyst at Autotrader.com.

Later, during the conference call, Musk appeared to back off a target to raise Model 3 production to 10,000 at some point in 2018.


"I was really depressed about three or four weeks ago", Musk said.

And while some customers may be frustrated by the delays, they're not necessarily losing faith in Tesla. "At the rate Tesla is producing, the Model 3 may be my Christmas present to myself next year!"

Another bright spot in Tesla's report was that the company delivered its 250,000th vehicle last quarter.

"Don't set your watch by this", Musk said.

And the company says there's no signs of demand slowing down.

Musk didn't confirm reports that the company has selected a site for a new factory in China.

Tesla was already facing backlash from its shareholders over production of the Model 3, which is the first vehicle that's priced more for the average consumer at $35,000.

"Every vehicle manufacturing line in the world has both manual and automated processes", said the company's Tuesday statement.

Revenue rose 30 percent to $2.98 billion. The company announced that its new vehicles had all the hardware on board they needed to achieve full autonomy previous year, and offers customers the options to buy an upgrade that would deliver autonomy via software update once it was available.

The company expects to receive an approval for this project by the end of this year.

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