Tesla delays Model 3 production as shares plunge

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You'll have to wait a bit longer mate

And six other law firms have issued statements recently seeking investors to be plaintiffs in planned class action suits against the electric auto maker.

When you include a $US7,500 United States tax credit, the price is cheaper than the average new USA vehicle and more in line with a well-optioned Toyota Camry.

Tesla CEO Elon Musk has had to divert resources from other company projects to try to accelerate the production of the Model 3. Here's what investors should know.

In mid-October, The Wall Street Journal reported that Tesla had reached a deal to open a factory in Shanghai's Free Trade Zone. "The actual article would have read, 'Tesla fires 2 percent of employee base for performance-based reasons.' Of course that would be a meaningless article so, of course, they forget to include that". Tesla said it deployed 110MWh of energy storage systems, growing 12% from the prior quarter and increasing 138% year-over-year, driven mainly by increased Powerwall deliveries.

As expected, adjusted loss per share widened significantly.

As for Musk's Model 3 "production hell", a caller asked him to rate where Tesla is on a scale of 1 to 10. It shelled out $1.42bn in the third quarter to upgrade its factories. Tesla has been saying for years that this was the model launch that would change everything and propel an electric vehicle into the mainstream. Tesla was still working out details that should have been set in stone a year ago. "The Model 3 is a 10-year program, and so we're talking about a few months out of the 10-year program that's in the grand scheme of things". Tesla's Model S P100D in "Ludicrous Mode" is so good at drawing power from this pack and sending it to the wheels that it can outrun every supercar in the world. "The Model 3 is a ten-year program".

Deliveries of the Model 3 made up a small part of the 26,137 cars Tesla delivered in the third quarter. Losses over the last nine years have ranged from £42m to £677m. Tesla is effectively engineering the production of this vehicle on the fly.

Tesla also admits that because "the Model 3 production process will be vastly more automated than the production process of Model S, Model X [.] bringing this level of automation online is simply challenging in the early stages of the ramp".

The company has been way behind in its Model 3 production goals due to bottlenecks at the company's Gigafactory in Nevada.

"We remain positive about the long-term prospects for Tesla, given the company's unprecedented growth profile, battery cost leadership, and elite brand recognition", Shah wrote in a research note to clients. Specifically, it expects a non-GAAP automotive margin in Q4 of about 15%.

Despite using over $300 million in operating activities during the quarter, worse than the $200 million it used in Q2, Tesla is optimistic about its cash situation. "In respect to China, I wouldn't expect any significant CapEx on China until 2019".

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen.

Watch Tesla's stock move in real time here.

Imported cars in China are subject to a 25 percent import tax and hence a local plant would make Tesla vehicles more affordable. The Motley Fool has a disclosure policy.

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