Tesla Reports Uptick in Model 3 Output, but Falls Short of Musk’s Goal

But as it scrambles to ramp up production of one critical model, the automaker may be encountering a new danger — a drop in sales of its two other vehicles. Tesla said it delivered 21,800 Model S and Model X cars in the first quarter, down 23 percent from the fourth quarter.

Michelle Krebs, a senior analyst at Autotrader.com, said that the decline might suggest that the initial allure of Tesla’s vehicles was beginning to fade. “You just wonder if there’s enough growth in electric vehicles,” she said. “At first everybody who wanted a Tesla and could afford a Tesla hopped on. But it’s not the newest thing anymore.”

Several weeks ago, Tesla said it was seeing strong demand for the Model S and Model X. In its S.E.C. filing, the company said first-quarter orders for the two vehicles were at a record and reiterated that “demand remains strong.”

A sustained slump in Model S and Model X sales could complicate Tesla’s efforts trim the losses it has been reporting quarter after quarter.

Even more important to the company’s stability is the increased production of the Model 3. Mr. Musk once envisioned producing as many as 500,000 cars this year, but production glitches and other delays have slowed Model 3 output to a crawl. In the fourth quarter, Tesla built just 2,425 Model 3s.

Tesla sought on Tuesday to allay concerns raised by some analysts that its production troubles could create a cash squeeze. It forecast that Model 3 output would reach 5,000 cars a week in “about three months” and that in the third quarter it would achieve “the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow.”

“As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines,” the company’s filing said.

On Monday, Mr. Musk took exception to a report by The Information, a technology news website, that he had pushed aside the company’s senior vice president of engineering, Doug Field, and taken direct charge of Model 3 production.

“Can’t believe you’re even writing about this,” Mr. Musk wrote on Twitter. “My job as CEO is to focus on what’s most critical, which is currently Model 3 production. Doug, who I regard as one of the world’s most talented engineering execs, is focused on vehicle engineering.”

After others commented on his post, Mr. Musk elaborated, saying he and Mr. Field had taken a “divide an conquer” approach that had him sleeping at the factory.

Including the Model S and the Model X, Tesla produced almost 35,000 vehicles in the first quarter, 40 percent more than the previous quarter. In the regulatory filing, the company called it “the most productive quarter in Tesla history.”

Tesla has been dogged in recent weeks by a barrage of negative news. Concern has grown over the safety of its Autopilot driver-assistance system after a fatal crash in California on March 23 that the company said occurred while Autopilot was engaged. It was at least the third fatal crash that has taken place while a driver was using Autopilot.

Tesla’s stock and bond prices have plunged amid concerns about how much cash the company is using as it struggles to speed up assembly and sales of the Model 3. With a starting price of $35,000, the car is e more affordable than Tesla’s other models and the company has been counting on a quick expansion of its Model 3 business to increase revenue.

Tesla’s shares were up 7 percent in afternoon trading on Tuesday after the company’s filing, but they have still shed 22 percent of their value in barely three weeks.



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