Tesla delivers 1550 Model 3s in fourth quarter

TSLA Short Interest

Many thought that the same would happen with Model 3 - that early cars would have issues, and later cars wouldn't.

In November, Tesla pushed back its target of producing 5,000 units of Model 3 sedan per week by December to the first quarter of 2018, ending in March.

One-third of the quarter's S3 were made in the last seven days. General Motors said Wednesday that it delivered more than 3,200 Bolts to customers in December - more than double the number of Model 3s that Tesla delivered for the entire fourth quarter. However, the automaker has been battling production problems since early in the Model 3 production process.

In contrast, production and delivery for Model 3 fell far below estimates.

The Nomura analyst Romit Shah, a Tesla bull, thinks Tesla's focus on quality control justifies its sluggish Model 3 production ramp. Of the last batch, 860 units were in transit to customers at the end of the fourth quarter and would be counted toward 2018 sales. Tesla is clearly now in what we call the "investment mode" relative to the Model 3. When discounting the massive miss on Model 3 deliveries, Tesla did exceed its previous guidance for total vehicle deliveries in 2017, coming in at 101,312 Model S sedans and Model X SUVs.

The company now expects to assemble 5,000 Model 3s a week by the end of June, delaying plans to reach that milestone by another three months.

If you contrast Model 3's issues with the nonissues on Tesla's other vehicles - the Model S and the Model X, which together accounted for over 100,000 deliveries in 2017 - questions start to get thorny.

Model 3 deliveries increased 7x sequentially from 220 in Q3 to 1,550 in Q4.

Despite the overall good news, Tesla stock slid by just over 1% on Wednesday.

For more on today's big stock movers check out the Final Round, live at 3:55 p.m. ET, right here on Yahoo Finance. The company said it "made major progress" in addressing those bottlenecks, boosting the production rate "significantly towards the end of the quarter". The last update on Model 3 production calls for "a production rate of 5,000 Model 3 vehicles per week by late Q1 2018", which we believe is ambitious. Tesla said the delay resulted from a "focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time".

"Each time that happens the concern will grow" about Tesla's ability to reach mass production with the Model 3, even though "I always felt like their production targets for this auto would be a big learning curve for them", Caldwell said. We know a number of them who continue to wait patiently for their highly anticipated cars.

Related news: