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Tesla's Model 3 volume production target pushed back again

From Reuters - January 3, 2018

SAN FRANCISCO (Reuters) - Tesla Inc (TSLA.O) delayed a production target for its newModel 3 sedan for the second time on Wednesday, disappointing investors even as it claimed major progress overcoming manufacturing challenges that have hampered the vehicles rollout.

The electric vehicle maker headed by Elon Musk said it would likely build about 2,500 Model 3s per week by the end of the first quarter, half the number it had earlier promised. Instead, Tesla said it now plans to reach its goal of 5,000 vehicles per week by the end of the second quarter.

The delay sent shares of the Palo Alto, California-based company down 1.8 percent in after-market trading.

The Model 3 is critical to Teslas long-term success, as it is the most affordable of its cars to date and is the only one capable of transforming the niche automaker to a mass producer amid a sea of rivals entering the nascent electric vehicle market.

Building the car efficiently and delivering it without delays to customers is also critical, as the money-losing company faces high cash burn. Delays increase the risk that reservation-holders will cancel orders.

In delivering 1,550 of its new Model 3 electric vehicles in the fourth quarter, Tesla fell short of Wall Street expectations. Analysts had expected 4,100 Model 3 sedans to be delivered in the fourth quarter, according to financial data and analytics firm FactSet.

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