Tesla shares plummet amid Model 3 production issues

Tesla shares plummet amid Model 3 production issues

After releasing third-quarter earnings in 2016, Musk told investors that Tesla would not need to raise more capital to launch the Model 3; however, the company received $1.2 billion from a share and convertible debt offering in March, and raised another $1.8 billion in a bond sale in August for Model 3 production.

The firm also delayed its production target for its new Model 3 car.

The setbacks lengthen the wait for hundreds of thousands of customers waiting for their Model 3 and extend the payoff period for the billions of dollars the company has spent to expand.

Musk told analysts a subcontractor for the Gigafactory "really dropped the ball", forcing engineers to rewrite software in four weeks.

"The little guy better have a lot more skill", the Tesla CEO, plagued by a persistent cough, said during the call.

To date, our primary production constraint has been in the battery module assembly line at Gigafactory 1, where cells are packaged into modules. After launching the mass-market Model 3 sedan, Musk at the time said the automaker would manufacture 20,000 of those vehicles by December, but had only produced 260 as of Oct. 2.

The company once again stressed that the car itself is not hard to build, but rather, it's the system of building the cars that's providing the issues.

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The company also said it plans to meet a key production benchmark of a weekly run-rate of 5,000 Model 3 vehicles by the end of the first quarter instead of the end of this year, as originally projected.

Tesla officially announced earnings for Q3 2017 this afternoon, and with early delays in Model 3 production, all eyes were on the production lines, supply chains, and other aspects of the "production hell" that Tesla continues to work through.

These credits are given to automakers that build zero-emissions vehicles, and they can be sold to automakers that lack a sufficient amount of credits (because they're too busy building, say, Hellcats). But it or something like it will have to be mastered if fully autonomous cars are to become a reality. In particular, Musk discussed in detail the battery module assembly issue mentioned above.

Earnings were in the negative.

The changes to forecasts of how many Model 3 sedans will be built are "likely to result in a significant reduction in production expectations" and increase concerns about about Tesla's ability to generate cash, Ryan Brinkman, a JPMorgan Chase & Co. analyst, wrote Thursday. Overall, the company's stock is up by about 50% for the year. While that's good for keeping personnel costs low, that introduces even more complexity into a schedule that may never have been as set in stone as it appeared.

The 700 workers canned from Tesla were from a workforce of 33,000.

The Wall Street Journal reported on Oct. 22 that Tesla had reached a deal with Chinese officials to open a factory in a free-trade zone in Shanghai.

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