Tesla falls behind on production of its 'mass market' electric car

Tesla Model 3

Tesla Model 3

The machinery to build the cars wasn't even installed until this spring.

But the company's delivery-to-customers performance over the last four quarters has barely moved: down 25; up 30; down 33 and up 45. This was apparently the company's all-time best quarter for deliveries on both the Model S and the Model X - by just a tiny bit - at a 4.5% increase over this same quarter in the year 2016.

Akshay Anand, an analyst at Kelley Blue Book, said vehicle production is one of the most complex tasks a company can undertake, and he noted that Tesla had slow production ramp-ups for its previous vehicles, the Model S sedan and Model X SUV. Tesla is also hedging on repairs and recalls by planning to sell cars in California close to its home base before filling orders from its pool of hundreds of thousands of pre-orders farther away from the very limited Tesla repair facilities (Some states have zero locations).

Only 260 of the sedans were produced in the third quarter due to "production bottlenecks", the company said, failing to meet founder and CEO Elon Musk's expectations of 1,500 Model 3's delivered by September. Quarter-by-quarter, though, Tesla's production rose a cool 17.7% (over Q2, 2017). While a nearly 18% jump sounds promising, it's important to note why. The numbers are well short of the 1,500 Model 3 deliveries that Tesla mentioned in its letter to the shareholders in August.

In its quarterly statement, Tesla blamed "production bottlenecks" for the hold-up. The Model 3 will be on a much larger scale.

Tesla attributes the lower-than-expected figure to production bottlenecks.

Contributing to a total of 26,150, the firm delivered 14,065 Model S and 11,865 Model X units against Baird's respective estimates of 15,000 and 10,800.

Goldman Sachs analyst David Tamberrino, who has been a Tesla skeptic, told CNBC that Tesla's miss is evidence that the electric car maker would have trouble getting to its own goals.

Tesla had previously guided that they would bring a Model 3 fleet for test rides at their stores during the third quarter, but that's not it. If production reaches Tesla's forecasts, however, the federal subsidies will run out sometime next year.

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