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Tesla sinks after hitting Model 3 production goal, but missing on total deliveries (TSLA)
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Tesla made true on its promise of building 5,000 Model 3 sedans in a week, it said Sunday.
The goal was met thanks to around-the-clock shifts and a makeshift assembly line in an outdoor tent.
However, the company still fell short of what Wall Street had expected for total deliveries.
Shares surged more than 5% when news of the production milestone crossed, before sinking into the red. Skeptics say the production rate may not be sustainable.
Tesla spiked as much as 6% in early trading Monday after the electric-car maker said it reached its goal of producing 5,000 Model 3 sedans in a week.
The production milestone was hit at about 5 a.m. PT on Sunday, a few hours after the company's self-imposed deadline, Reuters reported.
Despite the pop, shares quickly turned negative once Tesla confirmed the Model 3 milestone in a regulatory filing Monday morning that said it built 5,031 Model 3 vehicles in the last week of the quarter. Total deliveries came in at 40,070 vehicles — falling short of Wall Street's expected 50,300.
"We did it!!" CEO Elon Musk announced in an email to Tesla employees Sunday afternoon, which Bloomberg published in its entirety.
While the Model 3 production rate is a success, skeptics warn the recent burst may not be sustainable.
Workers had been alternating two 12-hour shifts a day to ramp up production, according to recent reports. The company even built a massive tent structure outside its main assembly line, building a supplementary line from salvaged parts, Musk said.
Production issues surrounding the Model 3 — heralded as Tesla's first "mass market" car — have plagued the company since the vehicle's launch. Tesla had struggled all year to meet its self-imposed goal of producing 5,000 of the vehicles in a week. Amid a cash crunch, Tesla has focused on Model 3 options with sticker prices above $65,000, as opposed to the more affordable $35,000 base model, which it has yet to begin building.
Goldman Sachs analyst David Tamberrino warned in June that Tesla would most likely miss its Model 3 targets, echoing the skepticism of many of his peers. Wall Street analysts polled by Bloomberg have an average price target of $314 for the stock, which is now trading near $359 a share.
Musk has acknowledged the production struggles on Twitter, where he discussed sleeping at the factory while also blasting out photos of the tented assembly line, as well as armies of seats and other car supplies destined for Tesla cars.
Monday's stock surge also makes true on Musk's recent warning of the "short burn of the century," another show of his disdain for short sellers, or those investors betting against Tesla's stock price.
"What an incredible job by an amazing team. Couldn't be more proud to work with you. It is an honor," Musk said in his email to employees.
He continued: "The level of dedication and creativity was mind-blowing. We either found a way or, by will and inventiveness, created entirely new solutions that were thought impossible. Intense in tents. Transporting entire production lines across the world in massive cargo planes. Whatever. It worked. Not only did we factory gate over 5000 Model 3's, but we also achieved the S & X production target for a combined 7000 vehicle week!"
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