Tesla Reaches Model 3 Sedan Production Goal

Tesla stated on Monday that it reached a closely monitored goal for production, though it fell short on deliveries for the second quarter.

The electric car maker’s stocks initially traded higher following the announcement, but it eventually erased the gains and the turned to trade lower during the midday trading.

Tesla said that it produced 53,339 cars during the second quarter. This was an increase of 55 percent from the period prior to that. The production numbers came out to 28,578 Model 3 sedans, which was triple from the previous quarter. There were also 24,761 Model S and Model X cars combined. It said that it was “the most productive quarter in Tesla history by far.”

Deliveries, on the other hand, reached as many as 40,740 vehicles. This fell short of what some analysts and participants on Wall Street had predicted.

For the second quarter of the year, Tesla delivered 18,440 Model 3 vehicles. According to Goldman Sachs analyst David Tamberrino, the consensus was that the company should deliver as many as 28,000 Model 3 cars. In addition, the company also delivered 10,930 Model S and 11,370 Model X vehicles.

Even if the second quarter delivery numbers will certainly get a fair amount of attention from analysts and investors, the story pushing Tesla shares higher is the Model 3 production, as well as weather the company can maintain a higher output rate for its newest model, powering the company to achieve a cash flow positive status in the second half of 2018.

The announcement came after chief executive officer Elon Musk congratulated Tesla employees for reaching the company’s target of building 5,000 Model 3 vehicles in the last week of June. The automaker has been trying to beat their 5000-per-week production target for several months. However, it has also faced many obstacles along the way.

Tesla said that it now expects to increase production to 6,000 Model 3 vehicles per week by the latter part of August.  The next crucial step in Musk’s goal to make the company profitable is to become cash flow positive. The company has reported only two profitable quarters since its initial public offering eight years ago.

Last Monday, the company reaffirmed its positive cash flow outlook for the third and  fourth quarters “despite negative pressures from a weaker [US dollar] and likely higher tariffs for vehicles imported into China as well as components procured from China.”

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