On Wednesday, Tesla (NASDAQ:TSLA) Inc delivered its third-quarter earnings report that disappointed most investors and analysts. Share of the American electric automobile maker slumped during Wednesday’s after-hours trading due to the weak earnings report as well as the announcement from the company that it would not be able to meet its ambitious delivery and production targets for its Model 3 sedan vehicle.
Tesla shares were down by as much as 4.9% during the after-hours trading on Wednesday after Tesla chief executive officer Elon Musk stated that their target to produce 5,000 units of the Model 3 vehicle which was sold starting at $35,000 making it the most affordable Tesla vehicle yet will not be met until the first three months of 2018.
According to Tesla, it now plans to produce ten percent lesser units of their Model S and Model X vehicles for the fourth quarter where the rest of its resources and production will be placed in their overall production of their affordable and mass market Model 3 vehicle.
"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," Tesla added in a statement.
For Tesla’s earnings numbers, the company posted an adjusted loss of $2.92 per share which was higher than most expectations of the company posted losses of $2.23 per share. However, Tesla’s revenue was at $2.98 billion for the quarter beating most estimates of $2.39 for their quarterly revenue. The company’s free cash flow for the quarter also grew more than expected to $1.4 billion compared to estimates of $1.2 billion.
For the month of October, Tesla also disappointed investors with its production numbers after it announced that it was only able to produce 260 units which was way below their initial forecasted targets of 1,500 vehicles. Musk stated that the company is now facing bottleneck production.
According to Tesla, the company faced complications regarding the manufacturing processes leading to a slower Model 3 production rate. The Model 3 vehicle is currently considered to help Tesla recover from its massive cash spending in the past couple of quarters as well as help its market value and earnings grow in the coming years. Tesla added in a statement that they are now making continuous progress in the resolution of their previous bottlenecks in connection with their issues.
Tesla’s most recent quarter earnings report marks one of the biggest losses for the company who is in the middle of developing plans and production of other vehicles such as the electric truck they announced a couple of months ago.