Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla Investors Focus on Liquidity, Ignore Model 3 Production Miss

Tesla began producing electric cars at its plant in Fremont, California, six years ago, starting with small quantities and increasing to about 100,000 vehicles last year. Estimates are from analysts that the company has a few months more to live, given its cash reserves, before the firm will be forced to tap equity or debt markets once again. Elon Musk has taken over responsibility for Model 3 production.

Invest wisely, my friends. In the next seven days, we expect to produce 2,000 Model S and X vehicles and 2,000 Model 3 vehicles.

Some analysts said there were signs that the company might have prioritised the cheaper auto, seen as crucial to its profitability, over its Model X SUV and its more-established and expensive Model S sedan.

Tesla announced a production target of 5,000 Model 3 sedans per week by the end of this year's second quarter.

The firm said in a statement it had doubled its weekly Model 3 production rate in the third quarter.

What could potentially change the best-selling EV ranking, as Tesla could potentially slow down delivery in the U.S. in order to push its 200,000th total delivery (Model S, Model X, and Model 3 combined) in order to start the phase-out of the federal tax credit in the third quarter instead of the second.

"The TP reduction is largely a reflection of the on-going delays to the ramp to reach c10k units a week and a time when Model 3 gross margins begin to normalize, with scale". Moody's warned that the company might need to raise another $2bn (£1.4bn) to remain solvent, and that its rating was likely to be downgraded further if it failed to meet its production targets.

After assessing Tesla's Q1 production numbers as well as the company's cash burn, Bloomberg's Liam Denning wondered if the shareholders' optimism was justified.

The real takeaway from the report is that unlike some of Musk's other notable successes, the vehicle industry may not have been as ripe for disruption as Tesla would have hoped.

Still, despite the stock losing 17% in the past month, the bulls believe in the electric automaker enough to keep the average target price at $324, according to Bloomberg - a 20% premium to where shares were trading Monday.

Quality issues (including a Model S recall, Model 3 panel fit issues) may now be under control, but left-field issues (such as high-profile crashes under autopilot) may still knock Tesla.

The production numbers, while short of Tesla's own target, are far above the 793 Model 3s built in the final week of a year ago.

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