Tesla faces delay with Model 3 due to Production Constraints

Tesla Motors has informed about bottlenecks the company is facing with production of Model 3. The company delivered less than its forecast of 1,500 vehicles during September. Tesla announced that the company is behind schedule on Model 3. Considering the current progress, Tesla could miss the December deadline for 20,000 vehicles per month. While Tesla is confident that the company would hit 100,000 vehicles per year mark for the first time in 2017, customers and market analysts would be worried about delay in Model 3.

Model 3 production started in July this year. During the third quarter, Tesla managed to produce only 260 Model 3 vehicles. Tesla management has no option but to improve production capabilities. The company is having almost half million pending orders for Model 3. Investors have supported the stock considering the strong order book for Tesla Model 3.

Tesla earlier informed, “Although the vast majority of manufacturing subsystems at...our California car plant...are able to operate at high rate, a handful have taken longer to activate than expected.”

Investors have supported Tesla and the stock has outperformed automobile companies in the last two quarters. The news of production delays could have an impact on Tesla’ stock valuation. Some market analysts have questioned Musk’s earlier history of underdelivering on promises. Tesla is also facing competition from other automobile companies. Tesla stock has jumped by nearly 70 percent this year but considering tough times, the stock could see correction during this quarter.

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