Why Tesla Model 3 Deliveries Missed the Mark

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The hype around the Model 3 exists not because it's the best vehicle in Tesla's fleet, but because it represents the automaker's shift from high-tech concept auto creator to a fully-fledged automotive manufacturer.

Slow production could affect the number of Model 3 buyers who receive the $7,500 federal electric vehicle tax credit, and it is unclear whether this may drive away buyers, said Cowen analyst Jeffrey Osborne.

But the company has so far has pushed back its target of making 5,000 Model 3's per week twice.

However, the delays intensify the rate at which Tesla is burning cash-US$1.1 billion in the third quarter and about the same estimated for the last quarter of 2017-and worrying investors, who have yet to see a profit from Tesla. At some later point this year, Tesla said earlier, it should ramp up production to 10,000 Model 3s weekly.

Estimates for Model 3 deliveries varied wildly, coming in as low as 800 from Colin Rusch of Oppenheimer all the way up to 2,250 from Jeffrey Osborne of Cowen & Co., and about 5,800 from analysts at Evercore.

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Tesla is expected to release its earnings report for the quarter and for 2017 in the coming weeks, which will give more insight into the company's vitals and what kind of delivery record it hopes to hit in 2018. The Model S led with 15,200 finding customers, followed by the Model X at 13,120.

Tesla announced Wednesday it delivered 101,312 Model S and Model X cars in 2017, a 33 percent rise over its 2016 figures.

"As we continue to focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time", read the trading note.

In the U.S., the Model 3 will be priced from just $US35,000 ($44,500), putting in reach of many consumers who would normally opt for a petrol-powered passenger vehicle in the segment. Tesla vehicle deliveries represent only one measure of the company's financial performance and should not be relied on as an indicator of quarterly financial results, which depend on a variety of factors, including the cost of sales, foreign exchange movements and mix of directly leased vehicles.

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