Robert W. Baird & Co. analyst Ben Kallo said he sees Tesla having enough cash and additional liquidity sources to cover it through the revised 5,000-a-week schedule, meaning no capital raise will be required in the first half of this year.
Tesla shares, despite paring some gains from a high of $385 in September, still trade at 46 percent above their price a year ago.
In the last seven working days of Q4, Tesla cranked out 793 Model 3s and the company expects to reach a production rate of 5,000 per week by the end of Q2 2018. The auto is the company's first lower-cost, mass-market-oriented electric vehicle, and hundreds of thousands of customers have reserved one. It then intends to achieve the previously predicted 5,000-per-week milestone by the end of the second quarter.
But at what point Tesla hits that inflection mark has been notoriously hard to predict.
On Dec. 3, Tesla announced it had only delivered 1,550 vehicles during the fourth quarter of 2017. Our 1Q Model 3 delivery forecast of 8k units implies a pace of less than 700 per week. In the entire fourth quarter of previous year.
The company said it has made "major progress" toward eliminating Model 3 production bottlenecks.
Tesla's slower ramp up in manufacturing Model 3s led analysts to speculate another capital raise could be coming. For now, however, Model 3s production is still stuck in first gear.
While investors certainly won't look at another Model 3 production delay favorably, they may at the very least find solace in the fact that interest in the Model S and Model X is higher than it's ever been. For Tesla itself, it is the pinnacle of Elon Musk's original strategy for the company: to make affordable electric cars. Some of the initial Model S and Model X cars had software issues and hardware glitches.
Serious problems turned up last summer at both the company's Fremont, Calif., auto assembly plant and its "Gigafactory" battery plant in Nevada that put the company in what Musk called "production hell". That's where battery cells are packaged into modules and four modules are packaged into battery pack.
In its third quarter, Tesla built just 260 Model 3s.
Tesla has once again failed to reach production targets for its new Model 3. It comes after a disappointing third quarter past year when only 222 Model 3s were delivered (Tesla was predicting 1,500). The company said it shipped 101,312 cars combined in 2017, which was up 33 percent over 2016, and in line with expectations.
Tesla shares fell as much as 3.6 per cent to US$305.68, the biggest intraday drop in five weeks.