Tesla CEO Elon Musk promised a sharp increase in the production of its highly anticipated Model 3, but after the first quarter of production, only 260 out of the expected 1500 were made. Musk cited “bottlenecks” as being the reason for the short in production target while reporting the company’s quarterly output.
Missing output targets by 85 percent send shares of most companies tumbling down, but curiously Tesla shares rose 2 percent on Tuesday. Tesla watchers say the unspecified bottlenecks might yet prove to be a blessing in disguise. With this being its first foray into mass production, they say Tesla has to take time to get it right. Even if shareholders and those who have made reservations for the Model 3 are not happy, the delay in the ramp up will be in Tesla long-term advantage.
A Disastrous Move To Be Averted
Jaime Albertine a senior analyst at Consumer Edge LLC observed that it is a lesser of two evils in a phone Interview, adding that ” Tesla has the choice to either disappoint investors’ expectation and sentiments and hurt stock prices today or disappoint its customers tomorrow with a recall. A recall of the Model 3 could be disastrous to the future of the company. ”
As it stands, Tesla shares didn’t even take the short-term hit as feared, as shares rose 1.3 percent to $345.39 as at 2:12 pm in New York, a sign of the confidence that investors have in the prospects of the first mass production Tesla that could disrupt the whole auto industry.
Despite a leveled response to it miss of production target, it is vital that Tesla sorts out its production problems to be taken seriously as the Alpha electric car company. Any continued challenges moving forward might prove disastrous for the company given that other major automakers are hot on its heels as they switch to electrified cars.