Tesla Production Hits All-Time High-But Still Misses Model 3 Targets

Tesla stock drops after Elon Musk jokes about bankruptcy and investors expect more bad news

People walk past a Tesla dealership in Chicago

Tesla didn't immediately confirm whether the photo was an extension of Musk's April Fools' joke or a hint toward future, Tesla-branded merchandise.

Jefferies analysts had estimated that Tesla needed $2.5 billion to $3 billion of fresh equity to fund the Model 3 ramp-up and several other Wall Street brokerages have predicted the company would need more funds this year to fund its wide range of technology initiatives.

The Buffalo Niagara region has a lot riding on the Model 3.

Tesla shares jumped as much as 6.9 per cent in morning trade, recouping a third of its losses from a week dominated by bad news about its credit rating and a crash involving a vehicle using its semi-autonomous driving technology. It expects to hit a weekly production rate of 5,000 Model 3 units within three months.

"Are they really at 2,000 or did they just stuff their system to achieve 2,000 for last week?" said David Kudla, Chief Executive and chief investment strategist at Mainstay Capital Management, who said he now has no bets on Tesla. The solar roof still has a long way to go to become the transformational product that Musk expects it to be. The company employs more than two thousand people. The overall volume in the last trading session was 16.09 million shares.

While that was enough to send shares higher and draw cheers from some analysts, not surprisingly it wasn't enough to mollify Tesla critics.

The production numbers, short of Tesla's own target of 2,500 per week for the end of March, are far higher than the quantity of 793 Model 3s built in the final week of past year.

Despite the shortfall, Musk promised a speedy acceleration in the next three months.

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The company has set a goal of building 5,000 cars per week by the end of the second quarter, as a prelude to annual production of 500,000 cars.

Tesla also said that initial customer satisfaction score for Model 3 quality is above 93%-the highest score in Tesla's history. That's obviously not the case but there has been intense scrutiny over the slow rollout of the Model 3 and upcoming debt payments.

From the perspective of the bond market, Tesla's situation has stood out because the falling stock price could have an impact on its credit quality.

The last week, especially, was full of bad news for Tesla.

Late in March, Moody's Investor Service downgraded Tesla's corporate debt further into junk status. It's believed the drop was due to a fatal crash last month involving a Model X running on Autopilot. And it issued its largest recall to date, warning about 123,000 Model S drivers that their car's power steering might fail. "Vehicle biz is hell", he said in a second tweet. An additional duty would further relegate Tesla into a niche marque only afforded by the most wealthy.

Tesla announced on Tuesday that it had delivered 8,180 Model 3 sedans from January through March, with 2,020 of the mass market e-cars produced in the last seven days of March alone.

But Tesla didn't stop there. A fatal Tesla Model X auto crash in California on March 23 also pressured share prices as well as the company's options and debt-market rating. "This is the fastest growth of any automotive company in the modern era". Tesla will report its earnings on or near May 2nd and be sure to look for our coverage and analysis immediately after results are in.

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