Tesla posts record quarterly loss with sluggish Model 3 production

When Tesla reported its third-quarter financial results on Wednesday, it missed earnings forecasts by quite a bit. The company posted wider-than-expected loss at $619 million as it spent heavily to ramp up production of its Model 3, its first mass market electric sedan.

It also missed profit expectations, reporting a loss of $2.92 a share on adjusted earnings, compared with Wall Street’s expectations of $2.30. Tesla posted sales of $2.98 billion, beating the expected $2.94 billion. The company burned $1.4 billion in cash against the $1.2 billion estimate.

The automaker said that Model 3 production has been slowed by progress at its Gigafactory, now saying it will reach its goal of producing 5,000 of the vehicles per week by early 2018, rather than the end of 2017. As the company announced in October, Tesla only produced 260 Model 3 vehicles in the third quarter of this year. The electric vehicle manufacturer attributed the production delays to “bottlenecks” and denied that there were any fundamental issues with the Model 3 supply chain.

“While we continue to make significant progress each week in fixing Model 3 bottlenecks, the nature of manufacturing challenges during a ramp such as this makes it difficult to predict exactly how long it will take for all bottlenecks to be cleared or when new ones will appear,” the company said.

During the third quarter, Tesla had record net orders and deliveries of its Model S and Model X. The company confirmed it delivered 25,915 Model S and Model X vehicles and 222 Model 3 vehicles during the quarter, for a total of 26,137 deliveries.

“Based on the recent acceleration in order growth, we now expect that Model S and Model X are on pace for about 100,000 deliveries in 2017, an increase of 30 percent compared to 2016,” the company said. “Notwithstanding these increased deliveries, we plan to produce about 10 percent fewer Model S and Model X in Q4 compared to Q3 because of the reallocation of some of the manufacturing workforce towards Model 3 production. As a result, inventory level of finished Model S and X vehicles should continue to decline.”

The company’s stock price fell around 5 percent in after-hours trading.