Tesla Inc. (TSLA) - Get Report shares posted their worst performance in more than three years on Wednesday, skidding over seven percent in Wednesday trading, or more than $25 a share to $327.09 as investors took some time to ponder the latest news of a missed delivery target vs. the optimism of the company starting production of its latest car, the Model 3.
Tesla last fell more than 7.24 more than five years ago, on May 11, 2012, when it fell 7.26 percent.
Tesla took advantage of the July 4th holiday to quietly release the disappointing news that its second-quarter deliveries fell 8% short of Wall Street estimates.
It said it resolved the issues in June and that, "Provided global economic conditions do not worsen considerably, we are confident that combined deliveries of Model S and Model X in the second half of 2017 will likely exceed deliveries in the first half of 2017.
The company said on Tuesday, July 4, that it delivered 22,000 cars in the second quarter, including about 12,000 Mosel Ss about 10,000 of its Model X SUV. Wall Street had expected the company to deliver about 24,000 vehicles in the quarter.
The news may raise concern about the company's ability to meet highly-touted plans to ramp up production of its car designed for appeal to a broader base of customers, the Model 3. The Model 3 is scheduled to start production this wee, and begin being delivered on July 28; Tesla said on Monday, July 3.
Tesla said a shortage of 100kw battery packs that power the vehicles caused the miss. It said new production line issues slowed the battery manufacturing process.
The company said however that it resolved the production issues in June, and that the latter part of the quarter saw production return to normal.
"The major factor affecting Tesla's Q2 deliveries was a severe production shortfall of 100 kWh battery packs, which are made using new technologies on new production lines. The technology challenge grows exponentially with energy density. Until early June, production averaged about 40% below demand. Once this was resolved, June orders and deliveries were strong, ranking as one of the best in Tesla history, the company said in a press release.
"We also finally added a sufficient number of Model X cars to our test drive and display fleet because our stores had been operating with far short of what was needed and, in some cases, none at all. There appears to be substantial untapped sales potential for Model X," Tesla said.
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