Tesla's Model 3 misses production targets a second time

A Tesla Model S car is seen in a showroom in Santa Monica California US

Throughout a year ago, Tesla Chief Executive Elon Musk had trumpeted a production level of 5,000 a week by December 2017.

Tesla shares closed lower for a second consecutive trading session on Thursday.

That number fell well short of Elon Musk's promise of producing 20,000 Model 3 sedans per month beginning in December.

The company expects to see a gradual production rise through the first three months of 2018, though, with the first quarter likely to end at a weekly rate of about 2,500 Model 3s. As we've talked about before, Jonas' approach to monitoring Tesla reminds us of a parole officer who falls in love with their parolee. Tesla produced 2,425 sedans during the period.

In the months leading up to launching the Model 3, Tesla raised at least $1.2 billion through an offering of stock and convertible debt in March and another $1.8 billion by tapping the junk-bond market in August. "We have them hovering about $1 billion in cash".

Tesla will start producing 2,500 Model 3s weekly by the end of the first quarter of the year, the company said in yet another update that disappointed thousands of people who have preordered the auto as well as investors, sending its shares down by 2 percent after hours.

The company said it's just now starting to hit its stride making the Model 3. It comes after a disappointing third quarter previous year when only 222 Model 3s were delivered (Tesla was predicting 1,500).

Tesla also said it had delivered 15,200 Model S and 13,120 Model X luxury cars in the fourth quarter, a 9% increase over third-quarter deliveries. The company delivered 101,312 Model S and Model X vehicles for the year, exceeding its forecast for 100,000 units.

The Model 3 - which starts at $35,000, or about half the price of its flagship Model S - was met with great enthusiasm when its prototype was first unveiled in early 2016.

Analysts said on Thursday they continue to believe that sales of the Model 3 sedan could transform the niche automaker into a mass producer, giving it an edge over a host of rivals such as General Motors and BMW who are entering the nascent electric auto market. Investors, on the other hand, will probably focus on the company's cash flow and the potential effect, which production delays may cause on its performance.

Previously, Tesla was trying to manufacture Model 3s at that rate sometime in 2017.

The company said it has made "major progress" toward eliminating Model 3 production bottlenecks. Cowen's Osborne wrote in a report to clients Wednesday that the carmaker may need to raise more capital again in the next three to six months.

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