Tesla says produced 2,020 Model 3 sedans last week
(Reuters) – Tesla Inc sought to squash any speculation it might need to raise more capital this year on Tuesday, driving the company’s battered shares higher as it announced it built 2,020 of its cheaper Model 3 sedans in the last seven days.
The company’s reassurance that it does not need extra cash sent a wave of relief through investors who sold shares of the electric carmaker through a week of bad news about its credit rating and semi-autonomous driving technology.
In early trade on Tuesday, Tesla shares jumped as much as 6.9 percent, recouping a third of the past week’s losses. They were up 3.2 percent at $ 260 in midday trade.
Musk’s $ 50-billion dollar venture said it would also churn out 2,000 of the Model 3 cars next week and promised output would climb rapidly through the second quarter.
“Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow,” the company said in a filing.
“As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”
Jefferies analysts had estimated that Tesla needed $ 2.5 billion to $ 3 billion of fresh equity to fund the Model 3 rampup and several other Wall Street brokerages have predicted the company would need more funds this year.
Some analysts said there were signs that the company might have prioritized the cheaper car, seen as crucial to its profitability, over its Model X SUV and more-established and expensive Model S sedan.
Tesla said first-quarter deliveries totaled 29,980 vehicles, out of which 11,730 were Model S and 10,070 were Model X.
Both were lower from the previous quarter and the first quarter a year ago.
“Maybe Elon Musk switched staff from Model S and X to Model 3 to get better production numbers for Model 3,” said analyst Frank Schwope from NORD/LB.
Musk himself has taken direct control of Model 3 production and the company says it already has about 500,000 advance reservations from customers for the car.
The Model 3 is the most affordable of Tesla’s cars to date and is the only one capable of transforming the niche automaker into a mass producer amid a sea of rivals entering the nascent electric vehicle market.
Tesla’s consistent failure to meet its production targets – it had promised 2,500 Model 3s would roll off its assembly lines per week by the end of March – has made Wall Street broadly more skeptical about Musk’s promises.
Several criticized as “tone deaf” an April Fool’s tweet from the billionaire that joked his company, which has $ 10 billion in debt, was “totally bankrupt”.
Tesla shares peaked at $ 389 last September and have been declining steadily since.
Analysts, however, are giving the company the benefit of the doubt as a big bet on the future of high-tech electric and self-driving vehicles.
The production numbers, while short of Tesla’s own target, are far above the 793 Model 3s built in the final week of last year.
“The company appears to be near the point of turning the corner on meeting guidance and production performance,” said William Selesky from Argus Research.
(Corrects to show production was for last seven days, not last seven days of March, in paragraph one)
Reporting By Alexandria Sage and Sonam Rai; Additional reporting by Munsif Vengattil; Editing by Patrick Graham, Bernard Orr