Yesterday, shares of Tesla (TSLA) gapped down ~2% but closed the session up ~2% after the company announced deliveries for the third quarter.
Tesla delivered 26,150 vehicles in Q3, of which 14,065 were Model S, 11,865 were Model X, and 220 were Model 3. This marked a record number of electric vehicle deliveries for the company, up 4.5% year-over-year and 17.7% quarter-over-quarter.
Model S and Model X deliveries came in higher than expected, which may temper fears of the Model 3 cannibalizing the two higher-end luxury EVs. Tesla even raised delivery guidance for the second half of the year.
However, it's really all about the Model 3 for Tesla going forward and deliveries of the mass market vehicle came is way below expectations. Telsa produced just 260 Model 3 EVs in Q3. Elon Musk had predicted 1500 for September alone.
Tesla said Model 3 production was less than anticipated due to production bottlenecks. "Although the vast majority of manufacturing subsystems at both our California car plant and our Nevada Gigafactory are able to operate at high rate, a handful have taken longer to activate than expected. It is important to emphasize that there are no fundamental issues with the Model 3 production or supply chain. We understand what needs to be fixed and we are confident of addressing the manufacturing bottleneck issues in the near-term."
Tesla's production and delivery forecast for the Model 3 is aggressive to say the least, and missing production targets has become the norm for the company.
The price action in the stock yesterday Tesla would indicate that investors aren't worried about the typical production headwinds for the Model 3. The company experienced them with the launch of the Model S and Model X. Elon Musk has said that the company has learned from its mistakes in that regard but the aggressive production targets make hitting the goal of 500K units in 2018 next to impossible.
Yesterday, analysts at Instinet initiated coverage of the stock with a Buy rating aand $500 price target.