Tesla Balks At Model 3 Production Questions — As More Emerge
It seems Tesla (TSLA) won't take reports that it is struggling to automate its production of Model 3 vehicles lying down.
XAutoplay: On | OffThe company on Monday rebuked as "fundamentally wrong and misleading" a Wall Street Journal report that it is building large parts of the Model 3, which is supposed to be a mass-market electric vehicle, by hand.
"We are still in the beginning of our production ramp, but every Model 3 is being built on the Model 3 production line, which is fully installed, powered on, producing vehicles, and increasing in automation every day," CNBC reported a Tesla spokesperson as saying. "However, every vehicle manufacturing line in the world has both manual and automated processes, including the Model S and Model X line today."
On Sunday, thumbing his nose at the Journal story that came out late Friday, Tesla Chief Executive Elon Musk had tweeted a link to an Instagram video of the Model 3 production line.
The Tesla spokesperson acknowledged Monday that it will take time to gear up for higher volumes amid soaring demand for its Model 3 brand, which starts at $35,000. But the carmaker reaffirmed "there are no fundamental issues with Model 3 production or its supply chain," downplaying the problem as a manufacturing "bottleneck" issue.
With a more affordable Model 3 brand, Tesla hopes to move beyond its image as a maker of luxury vehicles that sell for more than $100,000.
Shares of Tesla gave up nearly 2% to 349.85 on the stock market today. They sit 5% below their Sept. 18 peak of 389.61 after a failed breakout from a cup-with-handle base with a 370.10 buy point.
Various Wall Street analysts, in addition to the Journal, have raised concerns over whether the Silicon Valley company can ramp up Model 3 production quickly enough.
In the third quarter, Tesla totaled 26,150 vehicle deliveries, including 220 Model 3 cars, with the latter falling well short of analyst expectations of 1,000 or more.
While Morgan Stanley said the miss was not that concerning, it led Goldman Sachs to reiterate a sell rating on Tesla shares in an Oct. 3 note to clients.
IBD'S TAKE: Tesla stock has an IBD Composite Rating of 68, meaning it has outperformed 68% of stocks in key technical and fundamental metrics over the past 12 months. But it ranks No. 5 out of 16 stocks in IBD's Auto Manufacturers industry group. For more analysis of Tesla stock, visit the IBD Stock Checkup.
The Tesla spokesperson highlighted in comments to CNBC Monday that the company has been open and upfront about production speed bumps.
Indeed, the Journal's report came as Musk tweeted comments Friday about Tesla being "deep in production hell" and said it was working to fix Model 3 bottlenecks. Tesla would put off the unveiling of the keenly awaited Tesla semi truck to November in the process, he added.
Tesla Semi unveil now Nov 16. Diverting resources to fix Model 3 bottlenecks & increase battery production for Puerto Rico & other affected areas.
— Elon Musk (@elonmusk) October 6, 2017
Among other automakers, General Motors (GM) added 0.4% intraday on Monday, continuing its climb into profit-taking sell territory.