After declining sharply in regular trading yesterday, the stock of Tesla Inc (NASDAQ:TSLA) tanked some more after-hours in the wake of disappointing third quarter results.
The market was braced for a big earnings loss – though the red ink on the bottom line was of a more vivid hue than analysts had been expecting – but the real damage to the share price was done by news that the company had only shipped 222 Model 3 cars in the third quarter.
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The Model 3 is Tesla’s latest model, and is aimed more at the mass market than its other models, but the company has experienced well-publicised difficulties in ramping up production to meet strong demand.
More than 450,000 people are on the Model 3 waiting list, and the company had targeted production of 20,000 Model 3 cars a month by the end of the year. That ambition has now gone by the wayside.
“Based on what we know now, we currently expect to achieve a production rate of 5,000 Model 3 vehicles per week by late Q1 2018, recognizing that our production growth rate is like a stepped exponential, so there can be large forward jumps from one week to the next,” the company said.
Deliveries of the Model 3 made up a small part of the 26,137 cars Tesla delivered in the third quarter.
Combined Model S and Model X deliveries in the quarter grew 18% globally from the preceding quarter and 4.5% versus the same quarter one year ago.
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As for the loss per share, that weighed in at US$2.92, versus market expectations of a loss of US$2.45 per share.
Revenues rose to US$2.98bn from US$2.30bn a year earlier, which was ahead of market expectations of US$2.95bn.
Only one topic really mattered in the Tesla third-quarter financial results call for analysts held Wednesday afternoon: Model 3. In light… pic.twitter.com/QSHbMoseSS
— ???????? Jane Webster (@Jane__Webster) November 2, 2017
The company, which passed the milestone of delivering its 250,000th Tesla car during the quarter, said its Powerwall and Powerpack energy storage products were also experiencing growing demand.
“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% compared to 2016. Notwithstanding these increased deliveries, we plan to produce about 10% 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 said in its outlook statement.
Capital expenditures are expected to be roughly US$1bn in the fourth quarter, driven largely by milestone payments on Model 3 production equipment, as well as Gigafactory 1, and further expansion of the company’s stores, service centers, delivery hubs and the Supercharger network.
The shares were down 4.5% at US$306.62 in after-hours trading, having closed at US$321.08 (down 3.2% on the day) in regular trading.