Tesla, Inc. (NASDAQ: TSLA) reported its Q3 vehicle deployment and production on Monday, but the numbers were short of what investors and customers had expected. The less than expected news caused Tesla shares to fall 2 percent shortly after open on Tuesday.
Tesla reported that in Q3 the company delivered 26,150 vehicles. To break it down, 14,065 were Model S, 11,865 were Model X, and 220 were Model 3. Tesla stated that this quarter was the all-time best for its Model S and X deployments, showing a 4.5 percent increase year over year and a 17.7 percent increase quarter over quarter.
What investors are asking now is, what happened to the Model 3 production? Tesla produced less than expected Model 3’s than investors and customers had hoped for. The Model 3 was one of the most anticipated vehicles, which is also a primary reason why Tesla shares have shot up within the 2017 fiscal year.
In Tesla’s Q2 financial report, that the company stated that it expects to “achieve a rate of 5,000 Model 3 vehicles per week by the end of 2017. Tesla also said that it expected sometime in 2018 to increase production rates for the Model to nearly 10,000 a week and annually by 500,000.
But Tesla also stated that based on the company’s “preparedness” that it will be able to produce over 1,500 vehicles in Q3, yet Tesla only deployed 220. Although Tesla, did state that 260 Model 3’s were produced, it still fell over 82 percent short of what the company had expected.
Tesla said that the Model 3 production was less than anticipated due to “production bottlenecks.” The company says setbacks such as both its California plants and its Nevada Gigafactory “have taken longer to activate than expected.”
Although Tesla fell short of expectations for production, the company reassured investors that the Model 3 has not changed.
“It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term.” said Tesla.
The first delivery of the Model 3 was delivered to Tesla CEO himself, Elon Musk, back on July 7. Tesla shares rose nearly 4 percent in the next few days after, but when the first 30 Model 3’s were deployed, Tesla shares fell approximately 4 percent in late July.
The Model 3 announcement earlier in the year was the primary driver for Tesla shares. Now, with another problem in the production of the Model 3, Tesla shares can be anticipated to fall if the company does not deliver to what investors’ expect.