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Tesla sticks with Model 3 production targets

08 February 2018

Among the topics likely to be discussed on the conference call later today with analysts and investors are those shifting production targets, last month's announcement of a proposed all-or-nothing pay package for Musk and how much cash Tesla is burning through.

"Two of the zones that were subcontracted to other companies flat-out didn't work".

Tesla reported higher than expected revenues of $3.29 billion, a almost 10% increase from the previous quarter of $2.98 billion.

On Wednesday Musk's private aerospace company, SpaceX, blasted a cherry red Tesla Roadster sports auto into space in a successful test of its Falcon Heavy rocket. The convertible, with a dummy in a space suit at its wheel, is now heading toward an asteroid belt between Mars and Jupiter.

Production delays have curtailed deliveries of the vehicle to customers - only 1,550 deliveries in the fourth quarter, far below the 4,100 vehicles expected by analysts - meaning revenue from the highly anticipated vehicle has yet to hit Tesla's bottom line.

It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time. On Wednesday, Musk reiterated Tesla's most recent guidance, saying Tesla plans to be making 10,000 Model 3s per month by the end of the first quarter and 20,000 per month by the end of the second quarter.

Tesla is banking on the more affordable Model 3 sedan as it tries to move from a high-end niche player to a mass-volume manufacturer.

Some analysts had predicted that sales of the Model 3 would cannibalize sales of the more expensive vehicles.

Money-losing Tesla's long-term viability depends on annually selling billions of dollars of Model 3s, the new sedan that starts at $35,000, about half the price of its flagship Model S. Tesla said that net reservations for the new model were stable during the fourth quarter.

More: Tesla's make-or-break year? "It is imperative they fix their manufacturing issues and get production ramped up sooner rather than later". The goal, as Musk has said, is nothing less than full self-driving mode in nearly all circumstances.

Tesla said it had $3.37 billion in cash and cash-equivalents as of December 31, compared with $3.53 billion at the end of the third quarter.

It is also planning an autonomous coast-to-coast drive to "showcase a major leap forward for our self-driving technology", according to Musk.

The upshot: Tesla says it will allow it to rollout out a series of new Autopilot features in 2018 and beyond. It's also on the hook to build charging stations for its network of semi trucks.