Tesla Falls on Further Delay of Model 3 Production Target

Tesla Inc. pushed back a production target for its new Model 3 sedan for the second time, disappointing investors and causing its shares to slide.

The electric-car maker now projects completing the production of 2,000 Model 3s per week by the end of the first quarter, postponing plans to hit a milestone by another three months. Tesla said it would likely assemble around 5,000 vehicles per week by the end of the second quarter.

The announced delay in production targets caused shares of the company to fall in extended trading. The stock fell by as much as 2.7 percent after the end of regular trading to $308.80.

The Model 3 is seen as a key to Tesla's long-term success, as it is the most affordable among its cars to date and is the only one with the capacity to transform the niche carmaker to a mass producer amid a number of competitors who are making their push into the electric vehicle market.

Assembling the car in an efficient manner and delivering it without any setbacks to customers is also critical as the company faces high cash burn. The company burned through $1.1 billion in capital expenditures in its third quarter and said in November that Q4 capex would be around the same figures in the previous quarter. The delays also increases the risk that reservation-holders would junk their orders.

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